Oh, that delay!

Ouch!  Stocks got off to a pretty good start on Wednesday but volatility is still king and what we see in the morning is not what we've been seeing at the close.  The Dow lost another 167 points yesterday, but it hurt me a little more than that.

Yesterday I had mentioned that big down days during options expiration week tend to reverse before the week is up.  The Dow was down 207 on Tuesday.  When we started to see a 70, 80, 90-point gain yesterday morning, my thinking was - This could be the 100 to 200 point reversal day.  I decided to use that info to get out of stocks again because  this "tape" has been awful.  We're no longer in a buy the dip situation.  It's sell the rallies.

So my jumping in to the F-fund on a day the Dow was down 167 points seems like a panic sell, but actually I thought I would be selling a rally.  But no.  Once again I was screwed by the TSP deadline.  It never seems to work in my favor - or at least I don't remember those times.
                              
         

So, we have a dilemma.  This market is in bad shape, but it is so badly oversold that we are bound to have a snap back rally at any time.  And even though that is true, the fact that is has not rallies from extreme oversold conditions is the problem and a sign of a major character change in the the market.  But the rebound / dead cat bounce, whatever you want to call it, will likely be sharp and quick so the TSP deadline will get in our way.  Sitting on the sidelines could keep us out of any reversal by up to 2 days, depending on when it starts.  On top of that, the rallies could fail so you could jump in, miss 2 days of gains, get in, and the we turn back down.  That is why my idea (that I did not listen to) of buying in the stock funds 25% increments each week, would have worked well in this situation.

Looking at last March's pullback, the bottom was made during options expiration week, but the three big up days started on the Monday after options expiration week.  I am reading that the options situation could trigger strong buying pressure once they are sold or expire - meaning late Friday or Monday.  That would go along with what happened last March.

    

We are hearing a lot of comparison between today's market and the market we had during the credit situation in 1998.  I remember the 1998 August well because I was on the sidelines for a while waiting for a pullback and I decided to get in for August because the market did not seem to want to go down.  Remember, in 1998 we had to put our transfer in by July 15 to get in for August.  Well, we got our pullback late July and all of August, and it was horrible.  That 14% reminds me of how bad things can get.  And that was during a year when the S&P 500 ended up 28.4% for the year as the market took off shortly there after.  That's what I'm hoping for this time around as well.

    


No change from Trader Fred's TSP Trader System. As a matter of fact, things seem to be getting worse.  That's a little surprising.  The system has been safely tucked away in the G and F funds since mid-July.  Read what Trader Fred has to say today on his system page.

The EbbChart System is looking for a rebound today as it is in the I-fund after missing the recent fall.  It is still up over 14% while the 3 stock funds are barely hanging on to break-even for the year.  Find out more on the ebbchart system page.

We also have new Market Debrief and the TSP Corner articles today.

There isn't really too much more to say.  The odds favor a snap back rally some time soon, but there can be more damage until then.  The selling is reaching panic levels but we have not seen a capitulation yet - unless you want to call my sell yesterday a capitulation.  It's possible the Fed could step in at anytime and slash interest rates.  We don't know.  Play this any way you feel comfortable.  It's a tough call for everyone.

That's all for today.   I am currently 100% F fund but I am being very nimble while volatility is high.  See you tomorrow.

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