David,
You're very right. Many of the new style investors haven't experienced prolonged and sustained downturns. 2 months is nothing. There were some real claws to the bear markets in the 70's and 80's.
However, I can't remember this many 100 point swing days for a long time. Extreme volatility makes up (so far) for duration, it seems. The worst condition would be to have months and months of this. Right now, it produces margin calls and some lost money. Months of this and they start jumping from 1st floor windows, then 2nd floor windows, then 3rd floor windows and finally penthouses....(it's a old WS joke...).
That being said, at 2800 the NAZ would be -4 standard deviations from the mean, just as it was +4 at it's zenith over 5000 earlier this year. That's incredible divergence, statisically.
So.....where to from here? Don't know. Need a bounce to the 50 day MA on NAZ, but with new warnings each day, there is less of a confluence of opinion on what's safe (other than cyclicals, which are only in vogue for 3-4 days every 4 months.....LOL).
Steve |
