I know exactly what 'some of' you are thinking... Ok... Let's hear Mike tell those of us sitting on the sidelines that we are still wrong after the worst day in the market since March. Those folk are probably thinking... "See... I told you so!"
That's like the 99-year old lifelong hypochondriac saying with his last breath, "See, I told you I was sick and nobody ever listened to me!"
No... I haven't changed my mind about sitting on the sidelines. But, I should hasten to add that if you're fully in this market in a buy-and-hold strategy, good luck with that.
The S&P 500 is down -5.39% for the week. It is down -7.08% for the year. Could it move a LOT lower? Maybe. Could today be the bottom of the pull-back or the beginning of the next major bear market leg down? Either could be true. Personally, I am delighted to be exactly where we are in this market. We stopped out of most of our holdings today and most of those stop outs resulted in a net profit on the trades.
At the close today, our Tactical Growth model was still up nicely for the year and beating the S&P 500 by more than 11%. Even our high-risk Aggressive Growth model, which could easily move in much larger swings in a rapidly dropping market, managed to lose far less than the S&P 500 today and booked a large number of stop outs with net real profits on individual trades.
The 200-day moving average of the Total Market Index is still in a bullish trend. However, it will have to move up nearly 5% tomorrow to stay on that trend. A LOT of stocks went on sale today, but are those sale prices going to move lower tomorrow? Possibly. At this writing, the futures for tomorrow are positive; not surprising given the massive sell-off we saw today. If the pre-market in the morning is bullish, I will be looking to put some of our capital right back to work by picking up some bargains in the morning. I already have my shopping list and there are some dandies on it.
I still believe the massive underwriting of this economy by the current administration and the Fed cannot be ignored. As I have said many times, I do believe that this market has a 'floor' in it that will be hard for the market to break through... not impossible to break through... but certainly not easy.
I suspect that most of these sell-off events are buying opportunities as long as the 200-day moving average of the Total Market Index remains on a positive slope, which it is at the moment. But, one of these days, these rip-your-face-off bearish sell-offs will not stop with a one or two day event, but will portend the next major bear market. When that happens, we will be looking to switch into our bear-market strategy and put capital to work in inverse ETFs that move up in down-trending markets.
As for me and my plan for client portfolios, I am taking this one day at a time. As mentioned above, if the market looks to be rebounding tomorrow, I will be a buyer. If the market looks to be selling off hard tomorrow, I will stay in cash, for the most part, and 'may' put some inverse ETFs in play in our Aggressive Growth model.
Yes, today left a mark, but for my clients, our active management kept the losses in check and under control. No one likes to lose money and any loss is serious, but if you can weather these storms by losing far less than the market, it was a good day. Today (in that regard) was a good day in the market.