Stocks today were pummeled as the Dow Jones industrial average at one point plunged more than 500 points, although indexes reduced their losses in afternoon trading. But leading stocks found no safe haven.Pre-market IBD pointed out, in "Dow Jones Futures Tumble: Why This Stock Market Correction Is More Dangerous Than A Bear Market":
Selling spread to U.S. markets after bourses in Asia and Europe were roiled. London's FTSE 100 fell 1.2%, Germany's DAX 2.2% and the Paris CAC 40 1.7%. The Hong Kong Hang Seng Index plunged 3.1%, the Shanghai composite 2.3% and the Nikkei 2.7%.
On Wall Street, the Nasdaq composite and the S&P 500 slid 0.9%, but both had been down as much as 2.8% and 2.3%, respectively. The Russell 2000 fell 0.9%.
The Dow Jones industrial average also fell nearly 0.9% after components Caterpillar and 3M plunged on their earnings reports.
Caterpillar gapped down to a 7% loss, and 3M lost more than 5%. 3M alone accounted for nearly 100 of the Dow's 320-point drop. Post-earnings rallies for McDonald's (MCD), Verizon (VZ) and United Technologies (UTX) weren't enough to offset the losses on the Dow. McDonald's beat views and was added to IBD Leaderboard. Verizon was already on Leaderboard.
Volume and breadth indicated heavy institutional selling. Volume was tracking sharply higher compared with the same time Monday. Declining stocks led advancers by more than 3-to-1 on the NYSE and by 12-to-5 on the Nasdaq.
Indexes Undercut Lows
But even more worrisome was the fact that all three major indexes and the Russell 2000 undercut their Oct. 11 lows. That sets back the market's attempt to end its correction.
At today's low, the Nasdaq was down more than 10% from its prior high, which meets the traditional definition of a market correction. IBD already had determined the market was in a correction on Oct. 10. On that date, IBD downgraded its market outlook....MORE
...Stock Market Correction: Hope Doesn't FloatAfter the close yesterday The Fly at iBankCoin made a similar point, there is too much hope:
Stock market corrections like the one currently underway can be more dangerous than a more severe pullback or full-blown bear market. Why? At least with a much larger, sustained market correction, investors realize the odds are overwhelmingly stacked against them.
But in situations like the current stock market correction, investors still have hope.
To use an analogy, you're not going to go sailing into a hurricane. But if it's overcast and just raining a little, perhaps you'd venture out into the open seas, putting yourself at risk.
...I’ve had a punitive day, barely enough time to sit down and relax over a boiling cup of black coffee. Throughout the trading day, I cowered behind my 65% cash position, taking on new positions in the degenerate shipping sector.
What can I say? I’m a glutton for pain.
And here’s the point.
I went back to look at the stress levels in Exodus back in the most stressful time for stocks, perhaps ever — February of 2009, when the SPY bottomed at 666...Bonus points if the spelling on hair razing was intended.
...The big difference between then and now, of course, is that was end of world trading action — total and complete capitulation — the annihilation of western finance. This drop is methodic, yet relentless. These minor drops only make it worse, as it provides the weak with too much hope and keeps marginal players in the game. The only way we can truly bottom, once and for all, is for a hair razing decline to the downside, one that halts trading, and fucking breaks machines — men accidentally falling out windows, and buses crashing into fire hydrants....