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Flush it Goes – What a Profit Taking Drop

Yesterday I had no sooner written that Santa was dragging the markets higher than the drop began—the S&P500 dropped over 2% from the daily high—selling induced more selling when stop losses were taken out. This really started as simple profit taking – yes I know that folks posit that ‘maybe the rate cuts’ won’t come in time etc., etc. caused the drop, but it is much simplier than that so no use over analyzing.

Income issues that were very modestly green before the big drop yesterday turned very modestly red – not a big deal – this happens. Common stocks and income issues have been moving in one direction (up) all month, but we all know markets move both ways and no reason to make any changes or adjustments to plans.

The 10 year treasury is trading around 3.88% this morning–pretty much flattish compared to yesterday. We have jobless claims being released in 45 minutes and we have a GDP revision being released and we have the Philly
Fed Manufacturing report. Then at 9 a.m. (central) we have leading economic indicators. I will be looking for any economic softness in the numbers, but overall anything in normal ranges likely won’t move markets.

The S&P500 is up this morning by about 1/2%–tossing cold water on any of the pundits trying make yesterdays drop out to be the start of a major correction. There remains so much money on the sidelines it will hard to get a major correction without an economic or geopolitical event.

I mentioned already the Energy Transfer 9.25% preferred (ET-I) buy yesterday–my second buy of this one–this time at $9.73. Note that liquidation value of this security is $9.13 and the 9.25% dividend is calculated on this $9.13 value. For the most part this is a non callable issue. I continue to look for more buys. Note that I have been more attracted by the high yield issues recently–but honestly my positions in the safe term preferreds of CEFs etc are mostly full positions so I am hesitant to go crazy in that area.

Well let’s go! Will it be up or down? Interest rates look pretty firm at 3.88%–seems like they will drift in this area.

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