A Voice of Reason in an Unreasonable Market Ouch. And hooray. The former is probably how you're feeling after Monday's bruises. After all, it's not every day the market tumbles 1.2%, largely out of nowhere. The latter is how you're eventually going to feel - though most likely after a few more days like Monday - when you're picking up bargain-priced stocks at levels you were only dreaming about a couple of months ago. It's the "in the meantime" part that can be maddening. So, rather than talk about the cause of Monday's selloff, or even the ramifications, we're instead going to pull up a rocking chair and be a voice of reason. Beginning today, two schools of thought are going to emerge out of Mondays ashes. Both are at the extreme ends of the spectrum, and neither is all that accurate. The first camp is the bearish camp. These pundits, gurus, and commentators are going to hold the 1.2% dip on a silver platter (and garnish it with the fact that stocks have fallen a whole 3.6% since the late-April peak), and use this as evidence of a looming crash that's guaranteed to destroy your portfolio.... forever. At the same time, the media will play these bears against the bulls, who are already encouraging you to step back into the market because Monday's implosion was an 'errant' one, and stocks are 'radically undervalued'. These are the maniacs who always feel if you don't get back in now, you're going to regret missed opportunities ...forever. The truth of the matter? After Monday, it's going to take at least a couple of days for stocks to get their bearings again. To draw conclusions from those days - or from Monday alone - is a mistake. Then once that dust settles, stocks are still apt to do something far less exciting than what's being called for by either camp. So, you know what the best thing to do today is (unless you're truly an intra-day trader)? Nothing. Take a nap. Go play golf. Whatever. Bet you didn't see that one coming, did ya'? No, that's not a very exciting outlook. That's the point. Right now, emotions are on overload... fear, greed - everyone's feeling one or the other. These talking heads on TV (and in newspapers, and on the web) know it too, and they're milking it. By stirring you up and getting you juiced for action, they can sell more subscriptions, sell more ads, improve ratings, etc. They can do it by sensationalizing what just happened, and then painting a stunning picture of what's about to happen. It's all designed to keep you riveted, but it's mostly crap. Oh, odds are we'll see a bounce of some sort today and/or tomorrow, especially after the selling was stopped cold right at the 100-day moving average line. It's apt to be nothing more than a dead-cat bounce though. That's the part you can skip. Once the dust settles a couple of days from now, then you may want to start taking on whatever positions you still feel good about; your outlook may change in the meantime though. If you absolutely have to take action today, just know you're making an emotional decision in an environment where even the pros are throwing darts while blindfolded. We know that's not a perspective you're hearing anywhere else. But hey - we'd rather offer you something valuable like that when you need it the most, as opposed to writing something sensational but wrong. There's only one exception to the 'keep your powder dry' advice.... biotech. For those of you who've been following our trade recommendations lately, you'll know our current picks (ATEC, BIOD, AVNR, AEZS, and GIGM) are predominantly biotech names, or at least healthcare-related. That's not entirely a coincidence. If any industry can trade independently of the broad market, it's biotech. That's not to say that it always does, but it can, and often does. For proof, just check out the nearby chart comparing the percentage change of the S&P 500 over the past few years to the percentage change of the biotech industry's stocks. The correlation is quite low because biotech is just not that dependent on the economy; more than once were the two pointed in opposite directions. This bodes positively for our positions right now, though that's not even the point. We're simply pointing out that if you have to trade, biotech may be the top way to escape the broad market's malaise. We may even have a new biotech pick for you later this week. We're not going to force one just for the sake of trading though, and you shouldn't either. As far as a market outlook goes (which is subject to change), what we see on the horizon after a dead-cat bounce is more downside. THIS WILL FREAK MOST PEOPLE OUT. Don't be one of those people, as the way it stands right now, it shouldn't be anything more than a garden variety correction and ultimately a buying opportunity. Fact: The average market correction is a little more than 10%. Fact: As of Monday's close (and as was said above), the S&P has only fallen 3.6%. Fact: Investors have gotten spoiled by nearly nine consecutive months without any significant market corrections. Even the selloff that started before Japan's earthquake and didn't end until a few days after it was only a 6.7% dip. Folks, we're due fir a dip, but what we're due for really isn't that big of a deal. Most investors will not see it as such, and they'll panic in the wake of the selling. We'll be shopping. Likely downside targets for the S&P 500 are the lower 50-day Bollinger band at 1279, and/or the 200-day moving average line at 1238. The former would translate into a corrective move of 6.6%, and the latter would mean a corrective move of 9.6%... right in line with the market's normal correction.   From the Community Bryan Murphy got it right.... being 'up' on Monday doesn't inherently make a stock bulletproof, but any stock that can muster any progress at all on a day like Monday deserves a look. Did anybody else find themselves on the %$#@ end of a reverse merger of a Chinese stock? At the time James Brumley made the comments yesterday, CF Industries Holdings, Inc. (CF) had yet to actually punch through a key resistance line. In the meantime though, the wall at $144.50 came a tumblin' down. And check this out... this agricultural chemical name is actually growing profits. (Stranger things have happened). Nice breakout. A disgustingly thorough analysis of fuel-cell-powered truck maker (the big rigs and drayage tractors) Vision Industries (VIIC), aka Vision Motor Corp. They were supposed to take flight over a year ago, so take any bullishness on natural gas stocks now with a grain of salt. But, John Udovich makes a valid point about these three small names in the industry. 'Flight to safety' indeed. The consumer staples names have been recent top performers, and now we know why. If you want to know the best of the best of these names though, here's a hint.... MOOOOO. Art Bagra 'beefs' up the outlook with an udder-ly amazing commentary.       We Value Your Feedback Got comments, questions or suggestions? We want to hear from you. Send us your feedback. 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