The Rally that Failed
On my last podcast, which I recorded on Wednesday, I pointed out that the market’s failure to hold the rally in the aftermath of the rate hike. In the face of all of the bullish statements made by Powell about how great everything was, and how strong the economy was, we had a near 300 point rally that failed.
All Systems Go for a Market Decline
The Dow surrendered the entire rally, closed on the lows of the day; not a huge decline – it was only about a 45 point decline, but seems significant to me was the reversal. The fact that the market could not hold onto those gains – to me, that looked technically very weak. And I said on that podcast that I thought all systems were go for a stock market decline.
Not a Correction
Of course, I had a lot of other anecdotal evidence and things that I look at that had been leading me to believe that more down side was coming. In fact, I have never believed that we are in a correction. Everybody wants to talk about it on television – it’s a stock market correction, because they don’t consider it a bear market until you’re down 20%.
In a Bear Market
Well, in every bear market, before you get down 20%, you’ve got to be down 10%. So if this is a bear market, if we ultimately go down by more than 20%, then this is a bear market right now. It’s only a correction if it doesn’t turn into a bear market. But if it becomes a bear market, it’s been a bear market the entire time. I think we are in a bear market.
Fed Will Come in with Live Support
Now, I don’t believe this bear market will be as bad as it could be. This market could go down way over 50%; I am not expecting that, because I do believe that the Federal Reserve will come in at some point and save the market, or at least try to save the market. But I think it’s going to be a bear market before that happens, meaning the Dow will have to be below 20,000 before the Fed actually realizes that it needs to be put on life support.
1154 Point Decline in 2 Days
But what happened yesterday – the Dow dropped 724 points, huge decline, and then again today we were down another 424 points. 1154 point decline in 2 days. The bigger decline, percentage wise happened on the NASDAQ. The NASDAQ still hasn’t made a new low for this move. It did close today below 7000, down 174 points, 2.43% on the day, but we still have further to go.