Tumblin’ Tuesday (Again) – Markets Turn Ugly, Dow 25,000 Fails

Wheeeee!!!! 

As you know, we love a good sell-off because we're very well-hedged but now we seem to be breaking even lower and we'll have to look at improving our hedges – just in case.  We are significantly lower than 10/9's Tumblin' Tuesday and 10/2 was "Tuesday – Trouble at 1,700 for the Russell" and we're miles from that now as we are almost down to 1,500 and Sept 25th our Morning Report was: "Toppy Tuesday – Markets Bounce Back Ahead of the Fed" after 9/18's "Tariffic Tuesday – Markets Ignore Another $200Bn Drag on Global Trade".  Oh, and last Tuesday was: "Tempting Tuesday – Nothing has Changed but Markets Move Higher. 

I don't do these reviews to say "I told you so" – it's my job to tell you so!  Reviews are important because next time we're in a similar situation, you may recognize that that's what happened last time and that will help you make better trading decisions.  That's why I started keeping a blog in the first place – to review my own thought process as I traded!  Like last week, when I warned about chasing weak bounces, which we were clearly having that day.  On that Monday (15th) we had posted the bounce lines for the indexes, according to our Fabulous 5% Rule:

  • Dow (/YM): 25,450 (weak) and 25,700 (strong) – now 25,317
  • S&P (/ES): 2,775 (weak) and 2,800 (strong) – now 2,766 
  • Nasdaq (/NQ): 7,100 (weak) and 7,250 (strong) – now 7,157 
  • Apple (AAPL): $223.50 (weak) and $226 (strong) – now $222 
  • Russell (/RTY):  Anything below 1,552 is catastrophic – now 1,545


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