Volatility continues to ramp up, and it is starting to wear on people. We went 440 something days without a 5% correction and about 100 days without a 1% intraday drawdown in the S&P 500. Sixty-six days into 2018 and we’ve already seen seven days were the S&P 500 has closed down 2% or more. Many people can’t remember what volatility feels like and a majority don’t like it.
2018 is certainly not in great bull company.
This week the indices across the board were firming up a bit. On Wednesday the Dow Jones had a huge turnaround, it opened down 500 points, but right out of the gate individual stocks were holding up exceptionally well. In my opinion that led to the huge reversal, the Dow closed up 231 points, a 780 point swing.
On Thursday we had some follow-thru, and the market was showing decent signs of stabilizing; they got above their 5-day moving average for the first time in 20-days and stocks were acting well.
By Friday it was all gone, additional tariff news was too much for the market to handle going into the weekend, we lost the 5-day moving average and closed near the lows.
Bottom line; Take your stops on individual stocks as they come, you can always buy them back. And I know it feels horrible taking stops when the market is down 500 points knowing that you can quickly get a snapback that will make you whole again. But this market is not acting like the one we’ve been accustomed to; the V-rally market, the FOMO market, the BTFD market, not yet anyway.
The biggest fear for many should be the one that I mentioned HERE.
A downtrend that last several months is and should be the biggest fear for many. It will test everyone’s mettle, all that passive money that went in could quickly turn to exodus money for months and months when investors who thought they were in for a smooth up ride realize that it is not that easy.
I’m opening my managed assets program if you have an interest or need a second opinion feel free to REACH OUT.
Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at firstname.lastname@example.org or 646-480-7463.