Big Down Day Random Thoughts

  • We are finally seeing unadulterated selling today. I believe this needed to happen and is a good thing in the long run. A market that sets all sorts of records for being extended is not somewhere I want to invest.

  • If the market were to remain corrective for another week this would likely get sentiment closer to neutral right in time for a very seasonally strong month long period.

  • I believe the reason for the seasonal strength from mid-March to mid-April is that people receive tax refunds and there is the IRA deadline. Regardless of the reason there is a clear seasonal tendency.

  • It might be hard to believe but the market is already oversold. Most stocks have been declining as the Russell 2000 is now at levels first seen on January 24. That said, its not a great oversold reading.

  • The first dip in the market usually gets bought. Underinvested managers like myself are likely to use the first real dip of the year to add to longs.

  • I expect that the market will retest the recent highs by April option expiration, although I would not be surprised to see a couple more percent downside before that journey begins.

  • I am looking for one of two things before adding to longs. 1. A clear sign of fear, panic or excess negativity 2. More time to pass as this is only Day 3 of the correction. The closer to 10 days the better.

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