Quote:
Originally Posted by highnote
Two of my sell indicators were triggered on Friday. Combined with other factors it has been obvious to me since January there would be a correction. The hard part is getting the timing right. I have been 50% in cash for 6 months. The stocks I own are fairly low volatility, but they have fallen a bit.
VIX has nearly quadrupled to 37 since its recent lows of around 9.
There have been 4 prime rate hikes since December of 2016. The most recent hike was in January 2018. Those hikes were all ¼ point, but combined they equal a 1% hike since the low of 3.25% in January 2009.
When interest rates go up, stocks tend to go down.
Portfolio insurance is probably involved, too. If a little player like me got a sell signal then there were probably a lot of other big time money managers who got sell signals on Friday, too.
I think we all knew a correction in the stock market (as well as cryptos) was coming. It was just a matter of when, how big, and how long.
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Plenty of factors at work, including the rate hikes which still probably aren't priced in. Yesterday's sell off reminds me a bit of the market tantrums back in 2012 when rate hikes were discussed - perhaps a message for the new Fed Chair Powell?
Definitely had to be some margin calls too, and now some speculators will be left high and dry by their brokerages. If the dollar actually strengthens during the next big flush, things could crash pretty quickly. It only moved up a buck the last three trading days from 88.44 to 89.48. What's the market do if it goes back to 100?
