The stock market’s recent rally has been anything but steady. Following a rally during the early part of the year, the stock market has been shifting in both directions, with the latest gains slipping away only a few days ago.
There is no single answer as to why the stock rally paused, repeated warnings from the Federal Reserve and a number of economic data releases likely combined for the difficult environment that traders are dealing with at the present.
But now that the stock market rally has fizzled, what should investors do? First and foremost, take a deep breath. Despite the recent bad news, the market is still up 14% since the start of the year and closed at an all-time high just last week.
It is also important to keep in mind that stock market corrections are normal and even necessary. They help reset valuations, shake out excesses and rebalance portfolios. Corrections also give investors a chance to take advantage of good value opportunities that may have resulted from the selloff.
But don’t just rush out and buy anything. Have a plan that takes both fundamentals and technicals into consideration. Carefully review the company you’re considering, including market data and financial statements.
It is also important to keep an eye on broader market trends, as certain sectors and asset classes may be impacted differently than others. Finally, do your own research to build a list of potential investments and make sure these investments meet your individual objectives before making the purchase.
Overall, the stock market is an emotional roller coaster at the best of times and it can be tempting to panic when news of a correction arrives. However, taking a rational and disciplined approach to investing and maintaining a long-term view can help investors stay the course and ensure they don’t miss out on the potential gains of a market rally.
? “Rally Ruined? Uncovering the Next Step After the Stock Market Fizzle
