Yesterday’s market activity, as represented by the chart above (thanks to MarketWatch), reminded me of my skiing days when I was trying to avoid black diamond slopes whenever possible. While I have since given up skiing, I still try to stay away from these kinds of slopes in the financial markets.
There was nothing positive about the drop other than that it occurred on low volume, which is customary during the dog days of August.
Despite lower crude oil prices, the culprits were resurfacing and justified concerns about the validity and survival of Fannie Mae and Freddie Mac. While the jury is still out, to me it’s beginning to smell like another taxpayer bailout. Of course, calling it nationalization sounds so much better.
The sharp drop of all the major indicators pulled our Trend Tracking Indexes (TTIs) down as well, which leaves us positioned as follows:
Domestic TTI: -1.00%
International TTI: -8.30%
We’ll remain in cash on the sidelines until a trend reversal to the upside occurs.