I was away from the desk for most of the day so I missed the fireworks. The market’s disapproval with Washington led to a decline in the S&P of almost 5%. Sell stops were ticked-off as traders tried to protect profits, if any.
As suggested yesterday, traders now realize there ain’t anything else that can realistically be thrown at the problem.
Rumors abounded: there was even one that the government was going to do away with the Fed.
Herd mentality seems to be rampant and trying to differentiate one’s self from the market has become increasingly difficult and unprofitable. To own more than one or two positions is simply a recipe for losses. Taking profits, 2-5%, is seemingly the only way to survive. How traditional buy and hold investors intend to compete is beyond my understanding.
Not liking the opening I bought some protection with SDS, the inverse ETF. But this position could not totally protect me from my recent acquisitions.
And, adding gold yesterday helped. A little.
Importantly, the S&P did not break 820, it bounced off of 822 and finished at 827.
Don’t laugh but today’s decline gives me some encouragement the markets will bounce. Perhaps not on the opening tomorrow but I’d watch for green by the afternoon.
This will cheer you up. A Nobel Prize winner feels this is worse than the Great Depression: http://tinyurl.com/al7mg8
