Down goes the Dow

After today, this still looks like a good call. The DJIA, NASDAQ, and Russell are all looking bearish. The SPX turned bearish today, breaking the 50day Moving Average and price channel support. The next real support is the 150 day MA at 1792. (The 150DMA provided the support for the February low.)

The April 4th high of 1897 now signals a reversal top. Whether it is short-term (days), intermediate (weeks), or longer remains to be seen.

Hold onto your hats buy and hold types.

We have seen a week plus long pattern of plunges in the market followed by one day rallies in response to some words from the Fed.

If this goes on another week, time to bail.

This is exactly what went on in 2008 as the Dow drifted from 14k plus to 12k plus. And then the big plunge.

If the market does not right itself today and instead drops another point or two, we will be in a position where panic can set in over the week-end and a real sell off can begin on Monday

Why bail? Rebalance. It would be a buying opportunity.

I think he is suggesting that the better buying opportunity comes not during the drift period, but some time afterward--i.e. sell during the drift.

The 2013 gains really represent a towering mountain on the DOW chart:

http://stockcharts.com/freecharts/historical/djia2000.html

I post this chart only for the purpose of illustrating the 2008 drift the poster was talking about.

holy shoes of pre! Stocks are down a mind bending 2.5% from their all time highs! This is the big one! Look out below!

Why just yesterday the US had its biggest fall in...8 weeks! Holy mother of Jackie Joyner!

Chewie wrote:

Why bail? Rebalance. It would be a buying opportunity.

You don't see any reason to bail if the market is about to replicate its 2008 meltdown and lose nearly 60% of its value?

I also love it when stupid tools pull out things like:

"The biggest fall in 8 weeks!" "The biggest selloff since Nov 2013"

What b.s.

Down opens with a thud today, down 100 points in a couple of minutes.

my feeling is that these big down/up days are the machines trading - they all have similar programs - sell when stocks are falling, buy when stocks are rising. So in the absence of a trend, the machines can push things around a lot. Like 2% in a day, clearly.

I believe program trading is half the volume now, or something like that - easy for programs to push around the market.

and as much as I live ETFs, they are contributing to big up/down days b/c it is so easy to jump in and out.

Klondike55 wrote:

If this goes on another week, time to bail.

I thought June 2013 was the time to bail.

[quote]agip wrote:

holy shoes of pre! Stocks are down a mind bending 2.5% from their all time highs! This is the big one! Look out below!

Once again you distort the facts to support your view.

Dow all time high of 16,636 vs. current level of 16,063 represents a drop 0f 3.44%.

"The Nasdaq biotechnology index shed 5.6 percent, its biggest one-day drop since August 2011. That index is now down 18.8 percent since its February 25 record close.

The S&P 500 also posted its biggest percentage loss since February 3, while the Nasdaq has dropped 7 percent from its closing high for the year.

So we have down 3.44%, down 18.8%, and down 7% on three major indices.

How about the S&P? High of 1,897.28, currently 1,824.60 -- down 3.83%

Lots of numbers. No sign of your 2.5% claim however.

Now, if you think you have a strong argument, why the need to make-up numbers?

Enjoy the fall

Another gem: "he S&P 500 also posted its biggest percentage loss since February 3"

lol

BTW I agree that a crash is coming this year, and am waiting...

However the day just started, and the initial 100-point drop means essentially nothing, unless you are an active trader.

To me, it's more fiddle-faddle, and nothing serious...yet.

Klondike5 wrote:

[quote]agip wrote:

holy shoes of pre! Stocks are down a mind bending 2.5% from their all time highs! This is the big one! Look out below!

Once again you distort the facts to support your view.

Dow all time high of 16,636 vs. current level of 16,063 represents a drop 0f 3.44%.

"The Nasdaq biotechnology index shed 5.6 percent, its biggest one-day drop since August 2011. That index is now down 18.8 percent since its February 25 record close.

The S&P 500 also posted its biggest percentage loss since February 3, while the Nasdaq has dropped 7 percent from its closing high for the year.

So we have down 3.44%, down 18.8%, and down 7% on three major indices.

How about the S&P? High of 1,897.28, currently 1,824.60 -- down 3.83%

Lots of numbers. No sign of your 2.5% claim however.

Now, if you think you have a strong argument, why the need to make-up numbers?

Enjoy the fall

The 2.5% # is the Vanguard total world stock market index, ticker VT, before the open today. As of 9:56 AM VT, VT is down 2.7% from its all time high.

I prefer VT because it is a global measure of stocks and I and my clients have global portfolios. The US is only around 40% of global stock market capitalization right now. And with ETFs, you can get global portfolios as cheaply and easily as US only portfolios.

For the record, a broad US index, tracked by VTI, is down 3.9% from its all time highs.

didn't you say... wrote:

Klondike55 wrote:

If this goes on another week, time to bail.

I thought June 2013 was the time to bail.

RIGHT!

This thread should stand for all eternity as THE example of the most absolutely wrong call ever here on anything. It's embarrassing at this point really.

Dude left the market in June 2013. Damn! We are closing in on one whole year. Most people only actively (meaning they put money IN the market) for 30 years, so this guy will miss out on 1/30th of that.

Of course he was calling for a Dow of sub 13,000.

Trying to time the market like he says he does is asinine.

I currently do a little more than 20% of my income into investments of some sort...mostly stocks within mutual funds. That's a lot that I've put in since June 2013, and it's money that will grow (and has grown).

So, he pulls out of when the Dow is at 15,000, the Dow then goes all the way up to 16,632 and has now settled down to 16,105 as of this minute. At this point, if there IS a big drop where the Dow gets below 15,000 (and that for sure COULD happen; I'm not saying it can't), he would somehow say he was right or would claim victory in some way? Missing out on what would likely be a year or more of investing?

The thing is that after big drops typically come BIG returns...that's why 2009 and 2010 were so great.

So, that way it has worked for me is that I was in the market in June 2013 when the Dow was at 15,000, and I continued to put money in while ALL of my money not only gained due to growth, but also due to reinvested dividends. I own a certain number of shares today which is MORE than I owned in 2013, so if the Dow shrinks back down to 15,000 or below, I STILL own those shares, I will continue to buy stocks, and then when it goes UP again (and it will), what I'm holding will swell (that's what she said).

The reality is that if the Dow goes down to 15,000, we will think of that as 'low'. Back in summer 2013, that was 'high'. Well, from a LOW point, you then go back UP.

It is STILL best to invest based on these factors:

1) Do you have money to invest? If you are up to your eyeballs in debt, then no you don't. Get rid of that debt so that you have freed up some income and so you stop wasting money on interest.

2) How close are you to retirement? Further away, and you can just keep putting money in with really no fear. If you have more than 5 years before retirement, you could weather a bad downturn.

Those are the two big factors. You don't invest based on where the market is.

Get and stay debt free.

Have 3-6 months of expenses in liquid emergency fund.

Invest 15% or more into retirement accounts made up mostly of stocks within mutual funds.

Put money in. Put money in. Put money in, and don't stop or change the aggressiveness of it until you are within 5 years of retirement (want to have a FEW bonds in there after age 35, then that's fine, but I wouldn't do more than 20% in bonds until you are within 5 years of retirement).

IF you don't like bonds (and I am increasingly in that boat) then you COULD decide to be ALL in stocks even in retirement. IF you do that, you should either have a very good source of income from another source OR up to 3 YEARS of expenses that is not invested in stocks (CDs, MMA, or cash). This is ONLY to weather the storm of a bad market downturn.

Flagpole wrote:

RIGHT!

1) This thread should stand for all eternity as THE example of the most absolutely wrong call ever here on anything. It's embarrassing at this point really.

...

2) I currently do a little more than 20% of my income into investments of some sort...mostly stocks within mutual funds. That's a lot that I've put in since June 2013, and it's money that will grow (and has grown).

...Missing out on what would likely be a year or more of investing?

The thing is that after big drops typically come BIG returns...that's why 2009 and 2010 were so great.

3) ...I will continue to buy stocks, and then when it goes UP again (and it will), what I'm holding will swell (that's what she said).

...

1) INCORRECT. The astonishingly wrong calls made here comprise a long and distinguished list. This does not even come close to the worst.

2) (a) Keeping one's money out of the stock market and (b) failing to save a substantial percentage of one's income in a given year are two completely independent acts. There is no reason to believe that K5 chose to not add to his overall savings since last June. As a result there is no reason to believe that your statement is in any way relevant (or even reflects conscious thought of any kind).

3) 'that's what she said'?!? What are you, like 13 years old? In which case, I suppose good for you, trying to post on investment threads with the big boys.

1) No...CORRECT! It is the worst ever.

2) Studies show that that VAST majority of people who are investors and who exit the market DO NOT save or invest that money elsewhere during the time they had it out. I have brought this up several times in this thread with never a denial from the multi-named K5, so I'll go with what is VERY likely.

3) If That's What She Said jokes are good enough for Michael Scott, they are good enough for me. They are fun no matter your age.

1) Worse than claiming that bigfoot is probably real? I'm going to go with 'no'.

2) OK, so you are just going to flat out lie and make up shit. No respect for liars.

3) So, you can try to associate yourself with Michael Scott! Yay!. OK, make that a 13 year-old loser.

Pointing Out the Obvious wrote:

Flagpole wrote:

1) No...CORRECT! It is the worst ever.

2) Studies show that that VAST majority of people who are investors and who exit the market DO NOT save or invest that money elsewhere during the time they had it out. I have brought this up several times in this thread with never a denial from the multi-named K5, so I'll go with what is VERY likely.

3) If That's What She Said jokes are good enough for Michael Scott, they are good enough for me. They are fun no matter your age.

1) Worse than claiming that bigfoot is probably real? I'm going to go with 'no'.

2) OK, so you are just going to flat out lie and make up shit. No respect for liars.

3) So, you can try to associate yourself with Michael Scott! Yay!. OK, make that a 13 year-old loser.

1) Bigfoot IS real! He comes to the ranch and scares the chickens! I hear the knocks all the time. The woods back there are "squatchy".

2) No lies, brother. When people stop investing in the market (done for several reasons) they typically do NOT invest newly-gained money elsewhere as they wait to get back into the market. Fact.

3) Michael Scott is the perfect example of what a person should be...kind, loyal, generous and good-hearted despite his human failings. Besides, MOST people like a good "That's What She Said" joke. Easy and fun.

While I don't know how K5 times the market or whether it is asinine or not, I know that I time the market, in a very coarse way, and it has worked very, very well for me. I have gotten out and back in only 3 times...once it worked out fine, once it worked out great, and this time, we will see. I got out near the end of December 2013.

I use extremely coarse factors, and do not rigorize them in any particular way; I am not a fan of over-analysis. I look at election cycles, tax rates, corporate bonus rates, large-scale monetary policy, consumer sentiment in other parts of the world, black market estimates, market drivers such as tech IPO's, where the money is going, rates of return on investments other than the markets, whether the average joe has any money in his pocket, in the US in particular, what it can buy.

As you can surmise, I don't play with shorts, FOREX, or COMEX.

While I think there will be a significant downturn in the markets, I don't think it will be catastrophic or calamitous. There is a lot of expectation built into the markets, akin to the "confirmation bias" that agip brought up. People have been making money for what seems like an eternity--5 years or so. Memory is short, 2008 is now the distant past. A lot of people I know who are "investors" expect to be making money, and will see a market that is down, say, 20%, as the buying opportunity of a lifetime.

Even if there is a downturn greater than that, I see a relatively quick rebound as likely. Maybe not a complete rebound, but a good bounce. Money is easy to move around quickly within the market, once someone has decided to be there. Getting out, then back in, or into some other investment, is a much bigger decision that requires work and effort, and people don't want to do it.

So while I don't know how K5 "times the market", I have done very well with my coarse type of "analysis". Getting out then back in takes some courage. Yes, there are tax implications, and no, nobody will be lining up to help you do it. I'm talking in the aggregate of course, not in reference to active trading, where I think that the potential to lose is every bit as great as it is to gain, for the little guy.

Even though I'm in and out, I see myself as very conservative and pretty risk-averse. I only move when my horse sense tells me to, when the hairs on the back of my neck rise. Fear has been my ally, my trusted companion. Plus I have access to some unique and very experienced people, and when they make certain moves in their lives, I know it's time to get nervous.

DJIA down only 40 on the day now. Still fiddle-faddling.

Flagpole wrote:

2) No lies, brother. When people stop investing in the market (done for several reasons) they typically do NOT invest newly-gained money elsewhere as they wait to get back into the market. Fact.

Back it up (with something other than one of your typical, 'I have a brother-in-law who...' stories).