Breadth is running around 4-to-1 negative, but the point loss isn't that horrendous considering the surprise news. Market players are trying to figure out how this fiscal cliff issue might be resolved and they are already feeling a bit more positive as they consider some scenarios.
I've been complaining quite a bit lately about how difficult it has been to put money to work. I'm feeling much better about that this morning and feeling optimistic that this sudden selloff will help to create better opportunities. Already I'm seeing a number of things I'd looking to accumulate as conditions develop.
The big problem we face right now is that we are looking at some of the thinnest trading of the year during the holidays, as well as lots of end-of-the-year action that has little to do with the fundamentals of individual stocks. Tax planning and portfolio adjustments will be taking place over the next week and that can create some random and seemingly illogical action. With the danger of going over the fiscal cliff becoming more of a reality, there will be added pressure to do some selling for tax purposes.
One stock I'm adding this morning is MagnaChip Semi (MX). The stock received a Strong Buy rating and a $24 target from Needham this morning and was named a top pick at Citigroup last week. In the last quarter they topped earnings estimates by 120%, which was the sixth-straight positive surprise.
I'm going to be very selective with new buys here, but this hiccup and the increased volatility this morning isn't at all bad from a trading standpoint.