Any time a major stock average breaks through its 200 day moving average, it is a big deal. All major stock indexes suffered 2% declines. Most years pass without averages suffering such a loss. For years 2% down has been considered a benchmark for what constitutes a very bad day. 2% down days were common during the 2008 drop and during the market weakness of 1929.
In a market free from planned prices I would be shorting tomorrow with both hands. I am now 65 % in cash, down from 70% as previously reported. The change not because of cash added but profits on ongoing short sales and bear etfs. The next cash I add will occur only after a serious attempt to rebound. The Federal Resreve will almost certainly attempt to turn the market up. Expect a game changing announcement if the decline continues. Investors are expecting a rate decrease, I am guessing it may even be a rate decrease and possibly even a promise to support the market outright. Another option would be to offer huge tax benefits to Americans who buy stock. It could be anything but we have to expect it. Don’t forget this is a planned market. Down is not part of the plan and all stops will be pulled out in order to move it back up. These are the reason I am not doubling up on positions.
With the kind of catrastrophic event we are likely to witness, the positions I already have will increase 5 fold by the time it is all over. And, I will have still have a whole lot of idle cash to buy with during a once in a century opportunity.
Here are a couple of very timely tunes tunes written and recorded by Curbside Jimmy.