The market is off to an ugly start and very few areas of the market appear to be working. The S&P 500 is down 3.5% from its May 9 closing high of 1325. While this move is not fun it is a normal move in terms of magnitude.
If you are an investor, as opposed to a trader, you need to have some sort of exit strategy in place, hopefully determined at a time that you were not nervous about the market.
It is important to really embrace the fact that down a little goes with the territory of owning stocks. Over reacting to down a little is likely to result in getting whipsawed.
Whatever your catalyst to start getting defensive is, you should stick to it. Down 5%-10% should not be a deathblow for investors with a long term focus.
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3 comments:
Maybe you should update this. I did a similar post this morning looking at the threat of the trendline being broken. It didn't just break... it got smashed.
Roger is correct and his perspective is insightful as usual.
trendlines got smashed last october as well.
When we hit the top is still an unknown, even if it has happened.
KL
What "trendline" are you guys talking about? The 50DMA? 100DMA?
It matters which "line" you are watching. I believe Roger watches ( as do most investors ) the 200DMA which has not been broken for the SP500.
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