[Chart courtesy of MarketWatch.com]
- Moving the markets
If you had expected a bounce after yesterday’s drubbing, you would have been wrong. This morning’s opening happened deeply in the red with the Dow being down some 600 points, a level from which it rebounded only to visit the -640 level later in the session. While the major indexes managed to crawl off their worst levels of the day, it did not matter, since the bears were in charge and ruled over the inevitable outcome.
Tech heavyweight Apple, which was down at one point around 10%, also managed a comeback to close the session with “only” a -4.78% loss. In part, the punishment came in view of Apple’s disappointing Holiday season guidance. The FANGs in general are not only stuck in a bear market but haven given back just about all of this year’s gains after having collapsed to January’s levels.
The red numbers were not limited to just domestic equities. Global markets, including all of Europe and Asia, demonstrated that the current bearish tendencies may be here to stay—or even get worse. Europe’s main index, the STOXX 600, dropped to its lowest close in 2 years.
Technically speaking, many support levels have been or about to be violated giving more credence to the fact that the bear market may only be in its beginning stages. Obviously, there will rebounds as dip-buyers step in to drive the markets back up, but the major trend is down as our Trend Tracking Indexes (section 3) show.
This is not the time to be a hero by trying to catch a falling knife; this is the time to be in cash and waiting patiently on the sidelines for a resumption of the bull market, whenever our indexes generate the signal to move back in.