The Crash Continues

I mentioned yesterday the S&P 500 could pull back to the 940 level before resuming its uptrend.  Well it did pull back to that 940 level and it hung around there for about 2-3 hours.  Then, the next wave of selling came in and down we went.  The worst day since 1987.  The S&P 500 now sits at 908 and the gains from Monday are all but gone.  This is exactly the reason I mentioned I didn’t make any moves the last few days. The market needed to prove itself to us.  Well, it didn’t.  No follow through yesterday and an absolute horrible day today.  

We could argue that just like dropping one of those bouncy super balls off of a building, the market fell really far, really fast.  So, it bounced really big and then fall then gets a little smaller than the original fall.  Then, the bounce gets smaller, etc. You get the idea.  And, we could still see that.  It’s very possible we’re just in a very very volatile market where people are getting sucked in and getting whipsawed.  But, the other scenario is simply that the sellers haven’t exhausted and there are still people holding stocks out there that want to sell regardless of the level.  I constantly mention baby steps in this market.  Now if you want to buy a few bargains, it won’t bother me.  But if you’re thinking of plowing a bunch in right now, don’t do it.  I’ve talked to lots of people the last few days who have asked should they buy and some did buy big time when it when up only to get burned today.  This is a highly dangerous market.  This isn’t just a “buy the dip” market.  There are things happening that have never happened before and so the market (investors) is very indecisive and scared because we’ve never seen this before.

Bottom line.  Let’s let the market run up some with some follow through before we commit our dollars.  For the positions you do have, if you can sleep at night and it’s in moderation, don’t sell.


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October 2008
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