Although the character in the picture, Austin Powers, is so ugly it hurts, I’m thinking it’s part of Random Roger’s analogy with the market in recent months. So I’ll just make it a little bit smaller.
Sound As A Pound
Courtesy of Roger Nusbaum at Random Roger’s Big Picture.
Hopefully no one is shocked that markets made (or are still making) another run down after a pretty big run up. The velocity might be a bit of surprise (10% in two days) but the direction should not be.
I (many folks actually) have been saying there will be more ups and downs as the current bear market processes through to the next bull market. A persnickety point; if the 839 SPX low from October 10 ends up holding then we are already in a bull market (of course this is unknowable until after the fact).
Recently I talked about adding the double short back in if SPX went high enough or buying some stock if we go low enough with the range of 900-1000 being a sort of no man’s land. So for now, no man’s land. Maybe action based on the employment rate or something else.
The MPC cutting rates by 150 basis points should be, in case you needed it, a reminder that we still need a lot of time for things to sort out. I continue to believe that the low is about in (give or take 20-30 SPX points) in terms of price but not time–I think there will be at least a couple of more runs down followed by some big panics up.
I’ve been writing about feel good rallies leading to more declines for I don’t know how long in the hope that readers would not be shocked by this type of action. There is a tendency to forget but ups and downs like this are pretty standard fare in terms of direction even if the magnitude of the moves during the current cycle are not standard.
Much of short term market moves are determined by emotion. I am convinced that keeping your head while those about you lose theirs (or whatever that quote is) is relevant here. A reader asked why after such a big two day drop I had not commented on the volatility, was I used to it he wondered. I don’t know if I’m used to it or not. Are you used it? Hopefully you have trained yourself not sweat it.
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