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Markets lost 2% intraday yesterday, should we be worried?

Bears are coming out of the woods lately. Many say: “I told you so.” Are we turning into a long anticipated correction?

I am not so sure.

Yes, the recent market behavior looked scary:

 
SPX
 

The markets lost 2% intraday yesterday and broke below 50 day moving average. Later on it erased some of the losses.

Today, the market started higher but couldn’t keep up and dipped again. We finished where we started.

 
This market turbulence had a devastating impact on our portfolio too. During the whole month our net-liq grew steadily up and all our positions seemed sitting well in gain territory.

The last two days in the market (the tech stocks sell off) erased it all and we will finish June with substantial loss. Unrealized loss, but loss which makes me uncomfortable.

 
However, I still think this is just another dip. A gift to investors with a plan. Although the stocks lost 2% the US economy is growing and in fact accelerating.

This selling pressure from anxious bears is just an opportunity to buy the dip.

In the last six months, S&P 500 grew by 7% and Nasdaq by 14.4%. That is a good progress. And it seems we will see more uptrend as GDP is again pointing up.

Bear market
(credit: Hedgeye.com)

In 2015 our GDP peaked at 3.3% and since then, it has been sliding down to meeker 1.3% by the second quarter of 2016. For the rest of 2016 and in 2017 we saw GDP rebounding back up to 2.1%!

Are we to hit 3% GDP growth again?

We have seen a year of accelerating economy and consumer confidence. These will push the markets higher again.





3 responses to “Markets lost 2% intraday yesterday, should we be worried?”

  1. Stalflare says:

    Ciao Mart,

    Not sure what to make of it, I got caught in the middle myself having to roll several positions and generally ending up quite flat on my Options operations. I don’t try to time the market, that’s wasted time in my opinion, I try to have quick trades in order to be able to respond to violent changes, selling strangles where I can (one leg will be positive if all goes “pear shaped”)… General sentiment in Europe is pretty good, the economic cycle doesn’t point to a recession…

    ciao ciao

    Stal

    • Martin says:

      I think this was just a profit taking. In the US the economy is definitely improving and people started spending a lot again; banks are now allowed to do buybacks and increase dividends by FED, so I think we will see more uptrend coming.

      I too got hit hard by this selloff, too much exposure to the upside, but I am optimistic and I think we will overcome it. If next week we will see markets going up again, our trades will be good again.

      Thanks for stopping by!

  2. Stalflare says:

    Ciao Mart,

    Not sure what to make of it, I got caught in the middle myself having to roll several positions and generally ending up quite flat on my Options operations. I don’t try to time the market, that’s wasted time in my opinion, I try to have quick trades in order to be able to respond to violent changes, selling strangles where I can (one leg will be positive if all goes “pear shaped”)… General sentiment in Europe is pretty good, the economic cycle doesn’t point to a recession…

    ciao ciao

    Stal

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