The sell off continued on Monday, as is often the case when the prior week ends sharply lower, but what is also often the case if there is some kind of Turnaround Tuesday effect. Of course nothing is ever a guarantee and any attempt at a relief rally may not last long but at some point the selling will get overdone and there will be some bargain hunting. It's what we do with these opportunities that matters. The safety trades of bonds and gold both closed down as well, which is interesting since money usually has to go somewhere.
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Yup, I am on vacation this week, and this is typical market action when I take a vacation. I have said this a few times already but it's uncanny how this happens whenever I try to take a little time off. I plan to make a brief update each day here, to keep myself informed in this environment. My email correspondence may be a little slow but I will attempt to check it a couple of times each day. My apologies in advance for any inconvenience.
I think technical analysis isn't as useful in emotionally driven markets, and more sentiment driven indicators work better. This is something I wrote in the forum and it's basically how I see this mess.
In these types of markets there are two different approaches for both those in cash and those who own stocks.
If you own stocks, one approach is the the Jim Cramer view which is, no one ever made a dime panicking. Another is, sell everything to refresh your brain and see things from a different point of view, even if that is to buy back in fairly soon.
If you're lucky enough to be in cash or bonds, you can either pick up stocks at these "bargain" levels - bargain being a lot less then they were a coupe of week ago. Or you can stay put on the sidelines and wait until the charts improve, and the situation stabilizes. Picking a bottom can be very rewarding, and it's tough, but you don't have to be precise to make it work.
There's obviously problems with each of those approaches as you could miss a monster snap back rally, or the market situation could get significant worse.
Bottom line is there's no easy answer and you have to find your threshold for pain and risk, vs. the reward of guessing right. It's mostly emotional trading in this environment, and things can go too far in either direction - either on the downside or a big relief rally. Understanding this and having a plan helps so you can leave emotions out of it as much as possible.
The charts are ugly but there's opportunities coming - whether you are looking to do some buying, or sell a relief rally.
The futures were up big on Monday night, but that's tough to trust.
The damage has been done and it could get worse, but watch out for snap back rallies. Trading volume wasn't extreme which probably means the lows are not in yet. Capitulation is likely coming eventually. What will it look like? It's like that congressman trying to define pornography - you'll know it when you see it.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
To get weekly or daily notifications when we post new commentary, sign up HERE.
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
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[TR]
[TD="align: center"]
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[TD="width: 311, align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
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Yup, I am on vacation this week, and this is typical market action when I take a vacation. I have said this a few times already but it's uncanny how this happens whenever I try to take a little time off. I plan to make a brief update each day here, to keep myself informed in this environment. My email correspondence may be a little slow but I will attempt to check it a couple of times each day. My apologies in advance for any inconvenience.
I think technical analysis isn't as useful in emotionally driven markets, and more sentiment driven indicators work better. This is something I wrote in the forum and it's basically how I see this mess.
In these types of markets there are two different approaches for both those in cash and those who own stocks.
If you own stocks, one approach is the the Jim Cramer view which is, no one ever made a dime panicking. Another is, sell everything to refresh your brain and see things from a different point of view, even if that is to buy back in fairly soon.
If you're lucky enough to be in cash or bonds, you can either pick up stocks at these "bargain" levels - bargain being a lot less then they were a coupe of week ago. Or you can stay put on the sidelines and wait until the charts improve, and the situation stabilizes. Picking a bottom can be very rewarding, and it's tough, but you don't have to be precise to make it work.
There's obviously problems with each of those approaches as you could miss a monster snap back rally, or the market situation could get significant worse.
Bottom line is there's no easy answer and you have to find your threshold for pain and risk, vs. the reward of guessing right. It's mostly emotional trading in this environment, and things can go too far in either direction - either on the downside or a big relief rally. Understanding this and having a plan helps so you can leave emotions out of it as much as possible.
The charts are ugly but there's opportunities coming - whether you are looking to do some buying, or sell a relief rally.
The futures were up big on Monday night, but that's tough to trust.
The damage has been done and it could get worse, but watch out for snap back rallies. Trading volume wasn't extreme which probably means the lows are not in yet. Capitulation is likely coming eventually. What will it look like? It's like that congressman trying to define pornography - you'll know it when you see it.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
To get weekly or daily notifications when we post new commentary, sign up HERE.
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
