Today is the reason we have been so cautious lately voicing our concern for TSP members. It was downright ugly out there and unless you were short or on the sidelines the red was rampant as the bears pounded the bulls in every major sector.

While we expected this, and have been cautious for quite some time, the hedges or cash positions simply never look big enough on a day like today. Technical damage was severe as the S&P 500 broke through a critical support level at 1200 closing at 1196.

The talk today was inflation and traders seemed to be wanting out of this market after having an evening to contemplate Fed comments and some nasty earnings warnings. The only good thing about today is that it is now behind us.

Hopefully you have adhered to our caution and been raising your cash levels accordingly. As we sit on our hands it will be important to not be overly anticipatory about jumping back into the market. Just when you think Mr. Market is done dishing out pain, he licks his lips and comes back for more.

For those who haven’t been as cautious, you still have opportunities to raise cash. A common misperception among investors is that by selling they may miss the big turn. On the contrary, by raising cash you are wiping the slate clean to await a better market. Staying in the game is the most important, and that is only done by preserving capital.

A better environment will come; however, I suspect we haven’t seen the end of the selling.

Have a good evening.

 RevShark