The latest market selloff can be blamed on any number of things. China slowdown or a possible hard landing in China, basic profit taking after a six-year run, declining earnings, no further QE in the US, a uptick in rates in the US, weak US economy, commodity (including crude oil) collapse, weakening of 'risk' currencies due to the commodity selloff, disappearance of buybacks, dividends being lowered, strong US dollar pressuring balance sheets, bear markets in pc sales, rail fees,.........the list goes on and on. Bottom line: we need something solid to rally on and I fear any earnings pops will be given back. Netflix will be a good example tomorrow after the close. We simply cannot justify going higher without a catalyst.
The Wall Street Journal reminds us that this is not 2008 redux but just 'where' we bottom is open to speculation. So I'll just sit back with my hedges and wait it out. Here I'll note a few things I haven't seen plastered across the internet.
Although the mont
Hat tip to BornBroke
You know it's coming and it won't be any easier to take than when you were small and your Mother said "I told you so". The blogisphere will now erupt with the force of an annoying snaggle tooth emphatically screaming "I warned you" and "I said it was coming.........now buy my plan so you're prepared" and ca-ching, you cough up the coin like a kid at the carnival freak show. Every smidiot and hack will now attack your inbox on how they could have prevented your losses and how (via in their premier plan) you would have benefited this week.......if you had only listened.
Markets correct. On occasion, they correct more than mere pullbacks but the essential thing to remember is, they recover.
No, it's not a master plot against Donald Trump. His over-swept hair is safe and........seriously? Who would even dream up that scenario (smh) but the heavy-selling picture last week certainly backed up a Dow sell-signal and have many wondering, just where we'll stop or is the bu
“Is the S&P in a correction or Bear market Mom?” is the question I received from my daughter last night. She’s been learning the stock market slowly over the last five or so years and I cringe at times with the questions she poses however no question is a bad question. I’d rather she come to me than blindly follow some pundit or supposed guru to $99/month subscription. After all, if he/she is so smart – why do they even need to charge for anything? Just sit back and enjoy the wealth.
While the big boys and their algorithms have their calculated strategy, this is how I explained it to her in my simple, 'laywomans' terms. In my mind big money typically buys at major supports during a correction. They sit back and salivate at an opportunity to, not buy the dip, buy buy on the cheap and define their risk.
For me, I consider the monthly 20 SMA as you can see from my prior post on the subject here.
If only a correction, one would want to see SPX bounce off of the 20month or (the line in
Merely my observation of the S&P500 based on it's 20 year monthly chart. It would appear most 'dips' were bought heavily at the 20month SMA with the 20month (off the low) SMA being the line in the sand..........at least on the last two 'bubbles'.
The 20m (off the low) then became overhead resistance.
Just food for thought. I have sent an alert for SPX at both levels in an effort to "buy like the big boys". At least buying 'there' is limiting my downside risk (wink wink). We could definitely bounce before then but the MACD looks to be rolling over somewhat and let's face it; October is a tough month. I'm sincerely anticipating further volatility as even semiconductors and rails are exhibiting signs of selling. I look forward to buying cheaper; aren't you?
“There is time to go long, time to go short and time to go fishing” -Jesse Livermore
"What happens after a fast, high-volume 2-3-day sell off. There are three major scenarios:
- a stock move sideways on a low volume as it finally find bidders. Some will interpret this price action as the forming of bear flag. Others will look at it as the forming of a new base, which is an important prerequisite for higher prices in the future as it is likely to attract fresh money. Both groups could be right and that dispute will be solved only by price – in which direction is the stock going to break out from its new range.
- a stock continues to fall down in an accelerating fashion, breaching all obvious support levels; such action often leads to a sharp V-shaped recovery at some point as shorts decide to cover and new longs enter, attracted by the new price levels;
- a stock bounces sharply from one of its rising major moving averages, as the 50-day for example. Those that are to
Should I buy the dip? Should I blame it on lunar movements or is it another headfake? Will the Bears be punished once more and we head higher as we have in the past? Well for what its worth [which is zilch] I think we're in for a larger correction. Obviously I'm not a Economist or a Hedge Fund Manager [I wish] but I believe there are number of reasons we'll see *sell in May and go away* come to fruition this year.
- First and foremost, spiralling Eurozone debt and the additional debt they'll have to issue to bring themselves out of the immediate crisis. The PIIGS are not dead and I believe it will take months for this to fully play out as the ECB does its best to drum up support for the Euro in the meantime. This fear alone has and will send some investors to safer havens such as currencies and bonds.
- Then you've got to wonder where the ECB is going to get all of this money? Sure, turn on the printing press works but you know they're heavily invested in various markets and they c
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