Is this a disaster?
I don’t think it’s necessarily a disaster. Compare other times on the chart when the market had similar “falling off a cliff” days and it should ease your mind.
Was there any warning?
Nothing predicts or forecasts what the market will do in the future, but there were 2 markets that may have given a bit of a warning. I traded both of these markets to the long side, and it’s worked out quite well.
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While being tempted to short this market, there simply haven’t been any good shorting opportunities from a technical analysis point of view … until last week. The iShares for the Dow Jones US Real Estate Trust finally put in a potential shorting pattern ahead of the major stock indexes. See the chart to the left.
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In a recent Video Newsletter, I showed how the Bonds and the S&P were beginning to shift (the Bonds picking up strength in relation to the S&P.
This week we see the further result of that first clue!
The S&P 500 dropped like a brick and the Bonds have moved up aggressively.