Stocks are getting killed, with the DJIA down -500 after starting the day up more than +100 points. I’ve been calling this a Baby Shark stock market as the volatility day-to-day has been biting lots of traders. But maybe it’s now graduated to a Mama Shark stock market as the volatility is perhaps just turning ugly.
I’d warned that earnings season wasn’t likely to be the savior of the bulls that every major paper and news program had mentioned it might be. In large part because, the market often likes to make a fool out of the most amount of people as possible and the consensus was just too strong that earnings wouldn’t just be great, but would be great enough to make stocks go up again. Not so, so far. And I expect the rest of the earnings season is likely to remain a sell-the-news kind of reaction.
The good news is that I do think the markets are likely to finally start putting in some near-term bottoms if the earnings season sell-off remains, like the wild flowers on my property in NM, in full bloom. There’s likely to be some buying opportunities as earnings seasons rolls on and I am likely to trim yet more of my puts here soon, as I still have about half o the puts I started buying just two days before the markets started this tanking/volatility.
As for now, steady as she goes, as I remain long Revolutionary companies that are changing the world and in most of which we have 300-10,000% gains (not a typo). But I remain more cautious and recommend sticking with higher cash levels and a few good hedges (including some of the index puts we bought and still own half of) than I’ve had any time in the last eight years. I’m not bearish but I do think the Bubble-Blowing Bull Market that we’ve been riding for the last eight years is awfully late cycle at best.
Be careful out there, as I keep saying. But don’t panic. And don’t be greedy. Be cool, man.