If you look at the table on the left, you’ll see that this year has been anything but kind to investors. From my viewpoint, we’ve been in a bear market and May’s rally attempt, which caused us a domestic whip-saw signal, looks more and more like a dead cat bounce.
Even by Wall Street’s definition, we have moved one step closer towards official bear territory when the Dow’s drop yesterday pulled it down by 20.8% from its all-time high last October. While the other major indexes have not passed the 20% threshold yet, they are getting close. The widely followed S&P; 500 has come 19.4% off its high.
If you look through my StatSheet, you’ll notice that this year’s sharp downturn has taken no prisoners. You see more red than green numbers, which supports my view that once a bear market strikes, being in money market on the sidelines is the safest course of action.
For a synopsis of where we are and where we might be going, I suggest your read Todd Harrison’s piece on that subject.