So what seems like forever ago, I posted this chart (now updated):
thinkorswim Sharing
At that time, I was babbling on about the wedge and that usually the break out on it is positive, and that is why I thought (in February/March/April) that the market would reach new highs (which it did). It also puts into perspective a few other things:
1) The SP 500 2800 level was the ceiling after the initial down blast in February, was broken though in July, and then acted as a floor in August and then after breaking it again (on the downside) in October a ceiling on both attempts to rally back.
2) We still haven't retested the February lows. I know it seems much more painful than those February lows, and it seems like things have really fallen apart...but taking $AAPL as an example, in Feb Apple hit $150.24 at the low, and even after falling off the cliff lately it closed at $176.98 today. NFLX is up about 5% from the February low. INTC (Intel) was $42.04 in Feb, $47.39 today. Walmart (WMT) hit $81.78 in May, $94.16 today.
So why does it seem worse? I know for me, I was calling for a further breakout (upward) in November/December, and that hasn't happened (and I've sold a bunch of things accordingly). While I sold some things in January of the year, I also sold on a number of occasions (mostly in a 401k so tax deferred) to lock in some gains. Part of my rationale is 3+% on safe money as a draw, but part is also fear/wanting to have even more cash to invest if we see significantly lower levels).
I am also concerned on what I am starting to see on the debt front, where unlike earlier 'buy the dips' opportunities, credit seems to be telling me that a storm might be brewing. Take a look at the Vanguard High Yield bond fund:
thinkorswim Sharing. The trend is not our friend there.
So, I am conflicted. How many people out there were saying to themselves (when Apple was $232) - "Man, if it would only sell off to $180 I would be jumping on it". Well, it is there - are they jumping on it? That is why timing is so difficult - when the prices drop there is usually some reason, whether real or imagined. So I find myself worried and wanting to sell, but at the same time thinking about things that are bargains and that I should be assembling a buy list. (I have bought some things - knives slicing through my fingers as the stocks fall even further.)
