From Investor's Business Daily:
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.
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
Pre-market IBD pointed out, in "
Dow Jones Futures Tumble: Why This Stock Market Correction Is More Dangerous Than A Bear Market":
...Stock Market Correction: Hope Doesn't Float
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.
After the close yesterday The Fly at iBankCoin made a similar point, there is too much hope:
...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...
...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....
Bonus points if the spelling on hair razing was intended.
