You’d have to be a lunatic to think this “dip” of more than 1,000 OFF on the Dow is a buying opportunity. Not every sell off means you should just run out there and buy. Think of all the dips you chased the past year, only to get run down by trucks as the market spiraled lower.
PERMANENT BULLS will only tell you to buy — because they’re idiots.
I am not suggesting that you sell short into a 1,000 point hole. I am, however, strongly advocating RISK AVERSION — because this sell off is nothing in comparison to what awaits you.
The 10yr bond is up an astounding 18bps today, leaving the bond market in tatters. High grade and junk are both into the shitter and out.
Presently there is an urge to BUY DIPS and get involved in “blue chips” well off their highs. Let me remind you, the earnings warnings have only just begun. The valuations you relish now are predicated on GROWTH and not rapid deterioration.
I shall not be fooled into any large position during a period of tumult. Yesterday’s +900 followed by today’s -1,000 personifies chop and is a warning of volatility to come.
Can markets bounce here?
OF COURSE. The market does stupid shit all the time. We can rally 500 points off the lows. But it’s more likely people will want to hit bids into the close, as the whirlwind of headwinds takes hold and rips through the economy accompanied by panic.
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