Market players have been struggling with some of the worst action in
years during the first two weeks of 2016. I can offer a big pile of
numbers that illustrate how bad it has been, but it can be summed up
with two very simple statements.
First, we had over 1,850 stocks hitting new 12-month lows today. That is roughly a quarter of the entire market. Second, nearly 82% of stocks in the market are trading below their 200-day simple moving averages, which tells us how broad and deep this selloff already is.
Technically, the major indices are still not in a "bear market," which is defined as a drop of 20% or more from recent highs, but that is meaningless. The great bulk of stocks not only are in a bear market but have been in one for quite a while.
When we have action this bad, the question on everyone's mind is, "When will it end?" There is always a crowd of folks anxious to tell us everything is fine and we should just hold on to our stocks and wait for it to blow over. Others will tell us this is the start of a long, ugly downtrend and we better be prepared because it has a long way to go.
I have no idea who is right, but I do know the most important thing to me is to keep my accounts as close to highs as possible, and in order to do that I have to be defensive and be ready just in case things continue to deteriorate. I'm far more concerned about protecting capital than I am about trying to catch a quick turn. I know I'll have plenty of time to rack up some gains in a better market, so I'm not going to spend too much time or effort fighting with one that is in a downtrend.
http://realmoney.thestreet.com/articles/01/15/2016/how-bad-it-heres-how-bad-it?puc=yahoo&cm_ven=YAHOO
First, we had over 1,850 stocks hitting new 12-month lows today. That is roughly a quarter of the entire market. Second, nearly 82% of stocks in the market are trading below their 200-day simple moving averages, which tells us how broad and deep this selloff already is.
Technically, the major indices are still not in a "bear market," which is defined as a drop of 20% or more from recent highs, but that is meaningless. The great bulk of stocks not only are in a bear market but have been in one for quite a while.
When we have action this bad, the question on everyone's mind is, "When will it end?" There is always a crowd of folks anxious to tell us everything is fine and we should just hold on to our stocks and wait for it to blow over. Others will tell us this is the start of a long, ugly downtrend and we better be prepared because it has a long way to go.
I have no idea who is right, but I do know the most important thing to me is to keep my accounts as close to highs as possible, and in order to do that I have to be defensive and be ready just in case things continue to deteriorate. I'm far more concerned about protecting capital than I am about trying to catch a quick turn. I know I'll have plenty of time to rack up some gains in a better market, so I'm not going to spend too much time or effort fighting with one that is in a downtrend.
http://realmoney.thestreet.com/articles/01/15/2016/how-bad-it-heres-how-bad-it?puc=yahoo&cm_ven=YAHOO
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