We needed a refreshing pause. Were we really supposed to have our fourth straight triple-digit gain in the Dow Jones Industrial Average, which would have been the first time that ever happened?
Earlier I penned a piece about froth, and the market heard it and got less frothy. Just kidding. But we did see some profit-taking at last in some of the stories that I have been worried about. The banks at last sold off a bit. Good, the numbers are too high.
The mortgage-related plays, like Radian (RDN) and Genworth Financial (GNW) (sale of Radian duly noted, Doug), finally seemed to react to the decline in mortgage applications. I still think they will come back because the Federal Housing Administration is withdrawing from writing those policies. The transports finally dropped after the gain in oil -- yes, FedEx (FDX) can go down, too. And even the hottest of the hot, Mercadolibre (MELI) and Netflix (NFLX), can get hit on press scrutiny -- great job, Herb Greenberg -- and downgrades -- thank you, Morgan Stanley.
This market needed a break. This market needs to cool. This market needs to tamp down the froth, especially ahead of a Fed meeting.
Could today be the beginning of a mild correction, like the one we had in July after we broke the eight-day streak? I bet it is. That's what's necessary to make it so that no matter what the Fed does next week, we won't get hammered.
Because otherwise we certainly will.
