SP500 is down approximately -5% since the October 3, 2018 high of 2,940 to today's close of 2,785. This drop has occurred in 4 trading days. The SP500 dropped -10% in 10 days from the Jan 2018 high to the Feb 2018 low and took 7 months to get back up to the Jan 2018 high. A good question now is: "Since the SP500 easily caved through its 50 day moving averages, will it also easily plummet through it 200 day moving average?, or will institutional investors and mutual funds save it at the long term moving average?" (SP500's 200 day moving average is only 20 points away at 2765.) [SP500, 1 month, daily candles, 50ma (blue line) and 200ma (purple line)]
It matters too if you are a day trader, swing trader or position trader. On the weekly chart, for long term position traders, the trend is intact. If you are position trading, you should know that you would have to suffer from the drawdowns and hold thru it as long as the trend is intact.
"No, I think the Fed is making a mistake. They're so tight," Mr. Trump said. "I think the Fed has gone crazy. So you could say that, well, that's a lot of safety actually and it is a lot of safety, and it gives you a lot of margin. But I think the Fed has gone crazy." Pressed further on whether he's concerned about stocks, Mr. Trump suggested that the drop was to be expected. "No, I think it's good," the president told reporters Wednesday. "Actually it's a correction that we've been waiting for for a long time."
2765 will not hold. Tomorrow's open is already going to be at 275X . I will expect more panic selling cuz lots of stop-losses would've or already have been triggered. People will not be buying until the dust settles a bit so we are not going to find any significant support until at 269X. If that's broken, then we are going all the way back to 258X, the support after the Feb 05 correction, basically giving back all of the gains made since Feb. The market has been rising so fast, there is not a lot of layers of support in between so once it starts to go down, it crumbles pretty fast. My 2 cents.
You are right, which is why a 3-4-5% down day "feels" like a crash for most people since they are used to suppressed ranges and b.s. choppy go nowhere days.
You have to remember that stock valuations are based on formula's that mutual funds and institutional investors have to determine the fair value prices of companies. That formula is partially based on the cost of borrowing money. So as interest rates go up, it reduces the fair value of stock prices. The mutual funds and institutional investors input the new interest rate into the program (as well as the stock's other critical data factors and parameters) and a new stock fair value price outputs. If the current price is now overvalued compared to the newly computed price, they issue new reports and give those stock's a haircut. Most indexed stocks are affected. Since roughly 80% or more of most indexed stocks are held by the above mentioned Big Guys, the market falls. Prior to both the Bear Market of 2000-2002 and the Financial Crisis of 2008-2009, the Fed had cranked up the Fed lending rate to the 5.0% or greater. (Even higher in some prior Bear markets.) In the link below, carefully observe the green line (Fed Funds Rate) in the lower chart. You can touch the green line with your cursor and it will roll to various years and produce values. Check out the years 2000 and 2007. https://www.crystalbull.com/stock-market-timing/Fed-Funds-Prime-Rate-chart/
I lost 4k trying to buy the dip on NQ yesterday, this is in my short term futures account. In my long term account I am holding long from 2885 S&P but its no leverage etf position so Im not sweating it yet.