I expect the US stock indices will resume their uptrends soon and that my buy order on the S&P index will trigger and that I will make money. I expect that if I am wrong about this, weak stock prices will fall further and more of my individual stock sell orders will trigger and that I will make money. Combining A + B = C and D + E = C, I think I can expect to make money.
I positioned long via SPY options took advantage of some of the downside thought we would get in the low 60s possible mid 50s so i gave back 50% of my gains when we broke above 76. Net long now hoping 2912 as a first target isnt to greedy. I looking for a 20+ rally day overnight action will be the clue.
The Wall Street bull got bloodied and battered Wednesday as the stock market suffered its biggest sell-off since February. Investors bailed out of the market as fears about the economic fallout caused by rising interest rates and the U.S. trade conflict with China spooked them. Technology stocks, which had been leading the market higher for most of 2018 and had gotten pricey, were the hardest hit. The tech-dominated Nasdaq composite fell 4.1 percent. "These developments are telling us that the investment environment has become riskier," says Ed Yardeni, chief investment strategist at Yardeni Research. The Dow Jones industrial average plunged nearly 832 points, or 3.2 percent, to 25,599. The performance marked the blue-chip average's worst one-day decline since a drop of more than 1,000 points on Feb. 8. Growing concerns about the impact of higher borrowing costs on corporate earnings and consumer spending prompted investors to dump shares. "Fear is rising," says David Kotok, chief investment officer at Cumberland Advisors in Sarasota, Florida. "Investors are getting a wake-up call." Kotok went as far as to predict that a full-fledged market "correction," or drop of 10 percent, is underway. After its drop of more than 3 percent Wednesday, the broad U.S. market, as measured by the Standard & Poor's 500, is now 4.9 percent off its Sept. 20 record high. The yield on the 10-year Treasury note – a U.S. government bond that affects the pricing of things ranging from fixed-rate mortgages to stocks – hit a fresh seven-year high of 3.26 percent earlier Wednesday. Higher interest rates make stocks less attractive relative to other investments, including bonds, which offer higher and more competitive yields and carry lower risk. In the recent slide that began late last week, the Dow has given back nearly 1,200 points, or 4.6 percent since its most recent peak. The major worry weighing on stocks is that economic growth will slow if borrowing costs continue to spike, analysts say. "The markets are flushing out (economic) slowdowns to come" around the globe, says Gary Kaltbaum, president of money-management firm Katlbaum Asset Management. While the U.S. economy grew at at 4.2 percent pace in the second quarter, worries about the slowing economic growth around the world are growing. Citing the negative effects from the U.S. and China trade tariffs and slower growth in emerging markets, the International Monetary Fund this week lowered its global growth forecast for this year and 2019 to 3.7 percent, down from 3.9 percent. The S&P 500 stock index fell 3.3 percent, down for its fifth consecutive session and marking its longest losing streak since November 2016. Much of the pain was centered in tech stocks such as Netflix, Amazon and Google parent Alphabet, which had been leading the market higher this year but are now suffering steep drops. The market decline come ahead of the third-quarter earnings season, which kicks off Friday with results from J.P. Morgan Chase and other big banks. Some investors, reacting to negative earnings commentary from some companies, are unwilling to hold stocks in case results come in worse than expected, says Paul Hickey, co-founder of Bespoke Investment Group in New York. Source: USA TODAY
Stock market sell-off could signal turning point for bull market, as Dow plunges again. In a span of six treacherous days on Wall Street, the mood of the stock market has turned from giddy optimism to gloomy pessimism. Pinpointing major shifts in markets is an inexact science. But some Wall Street pros say the current one has reached a turning point, as the low interest rates that powered stocks higher over the last decade give way to higher borrowing costs and heightened risks. A swift 1,776 point, or 6.6 percent, dive in the Dow Jones industrial average just a week after it hit a record high shows just how edgy and uncertain the investing environment has become. Investors, who a week ago were talking up the market's prospects thanks to a strengthening economy, are now noticing a worrisome shift in its behavior. "Has the market hit an inflection point? I think it has," says Jim Paulsen, chief investment strategist at The Leuthold Group, a Minneapolis-based money-management firm. This market downturn, he predicts, will likely be more severe than the 10.2 percent drop the market suffered in February. But he's still not sold on the idea that the break will lead to a bear market, or 20 percent drop from the market's recent high. The debate about whether the market vibe has flipped from bullish to bearish centers around a few key issues: They include risks to the economy caused by a rise in interest rates; trade frictions with China; the recent drubbing of popular technology stocks; and increasingly high investor expectations that could lead to easy disappointment. The Dow, which is still up 1.3 percent on the year, is trading at its lowest level since late July. Some Wall Street pros, including Amanda Agati, co-chief investment strategist at PNC Financial Services Group, say the recent carnage on Wall Street was long overdue and is a "short-term blip" that will settle down quickly. She stresses that the U.S. economy and corporate profitability remains strong and the threat of recession is low. The mood of investors will brighten, she predicts, when companies start reporting their third-quarter results. Despite all the bad news piling up on the market, it "doesn't mean investors should sell equities wholesale," says Subramanian of Bank of America, adding that she still expects the S&P 500 to rebound and finish the year near her firm's 3000 price target on the S&P 500, or 10 percent higher than Thursday's close of 2728. She recommends investors move their money into larger, high-quality stocks that are less dependent on borrowed money to grow. "I think earnings will be really strong and provide an underlying support for the market and be a positive catalyst," she says. The current downdraft has a different feel than the sell-off in February, she adds. That drop was caused by too many investors making a big bet on the stock market remaining calm, which backfired when volatility roared back, catching them on the wrong side of the trade. Still, others worry that the market is entering a more difficult phase, one that will have a much different, more challenging feel to it. So what changed in the past week that has investors so worried about the longest bull market in history? Interest rate angst The biggest change has been an acknowledgement that rising interest rates could cool a strong U.S. economy and also put a dent in corporate earnings. The combination of the Federal Reserve hiking short-term rates last month and another increase expected in December, coupled with a spike in the 10-year U.S. government bond to a seven-year high has made stocks less attractive compared with lower-risk bonds. Low rates and cheap money resulted in a flood of money into stocks in recent years, as people searched for bigger returns. But now financial conditions are getting tighter. "The wave of money that was moving into the market is now reversing," says Savita Subramanian, head of U.S. equity strategy at Bank of America Merrill Lynch. "As liquidity is withdrawn from the market, it amplifies market volatility" and price swings. Higher borrowing costs also make it tougher for Americans to afford houses and buy cars on credit, analysts say. Trade war reality The protectionist trade policies of President Donald Trump and his administration's tariff fight with China have upended the long era of free trade. Tariffs also create greater uncertainty and inflationary pressures. That has unintended consequences, ranging from a disruption in global supply chains for technology to higher costs for businesses that either have to eat the costs or pass them along to shoppers through higher prices. "The trade war is no longer abstract economics, we're now starting to see it is real-world stuff showing up in the earnings results of companies," says Hugh Johnson, chairman and chief investment officer at Hugh Johnson Advisors in Albany, New York. He notes that companies ranging from luxury retailer Tiffany to auto parts maker Delphi Technologies have warned that their profits will take a hit due to cost pressures related to tariffs. Fading tech stocks After years of leading the market higher, fast-growing and innovative tech companies like Netflix, Google parent Alphabet, and Apple have come under intense pressure in the recent sell-off, signaling that investors are becoming more risk averse and taking a more defensive stance. "The sell-off has attacked the leadership of the market, and that's a significant change," says Paulsen. "These are the names that most people own and feel really good about. You are kind of punching investors in the gut where it hurts." The tech stock drubbing, which also has been driven by increasing fears of regulatory scrutiny from government amid privacy breaches, shows "investors are getting a bit more defensive," Agati says. Expectations are high ... too high Consumer confidence is at an 18-year high. And small-business optimism is at its highest level since 1983. And why not? The economy's 4.2 percent growth in the second quarter was the fastest in four years, and the nation's jobless rate is near a 50-year low of 3.7 percent. The good times might lift investor expectations too high, which raises the risk that incoming good news on earnings or the economy won't be good enough. "That is a higher-risk, lower-reward market," says Paulsen. Indeed, all that confidence can lead to complacency and dangerous risk-taking that can lead to bad outcomes, he adds. "Confidence reflects greed," Paulsen says. "It reflects complacency. It leads to behavior that lends itself to people getting out over their skis, whether borrowing too much money or getting too exposed to risky parts of the market or piling into the popular stocks that are working." SOURCE: USA TODAY.