This post Making Sense of a Weird Market appeared first on Daily Reckoning.
There’s a stock market crash coming.
Maybe.
It’s been a wild period in the markets. Between earnings season, increased tensions with North Korea and CEOs abandoning Trump after the Confederate statue controversy, investor anxiety has been on the rise.
That came to a head earlier this week when more than 90% of the stocks in the S&P 500 ended deep in the red. The tech-centric Nasdaq Composite plunged more than 2%.
The market was heavily down again yesterday. And as I write these words this morning, the major indexes are down again.
Needless to say, the big tail wind that’s been driving the broad market higher has tapered off.
Does that mean that the S&P is set to plunge now? No — it could turn around and tick higher, actually. But it does mean that we don’t have as clear a picture of what’s going to happen next in the big index.
But to be clear, there are some very good reasons why Mr. Market might be due to roll over.
Some very smart people — including some of my colleagues at Agora Financial — think that you have reason to be worried about owning stocks right now.
So where do I stand on that?
One of my readers, named Al, cuts to the chase with the following question:
Hi Jonas,
With all the Agora publications talking about a looming correction ahead — what’s your take on that and how should we play our positions to reduce risk, or will those positions be affected at all?
To start, let’s look at the first part of Al’s question — my take on all the correction and crash talk.
First off, we’re probably going to experience a stiff correction at some point in the not-so-distant future. It’s inevitable. But that’s not much of an insight.
And as to when it might happen — next week, next month, next year — your guess is as good as mine. Heck, it may have just started.
That’s not a cop-out answer.
It’s a way of thinking that could make you a more profitable trader than 99% of all other market participants. You see, it’s human nature to want to predict what’s going to happen next in the stock market.
There’s a reason why CNBC and all the other media outlets gather up all the stock market predictions from Wall Street strategists every year and rank how close they got to the final number at the end of the year. It makes for great TV. Easy ratings.
But don’t you think it’s kind of funny that CNBC never ranks those Wall Street talking heads by how much money they made their clients instead?
CNBC — and The Wall Street Journal, CNNMoney, etc. — are all fixated on who’s right. But they totally ignore the fact that there’s a difference between being right and making money.
And the way you make money in the markets is by identifying a consistently profitable system and then sticking to that that system — …read more
Source:: Daily Reckoning feed
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