It didn't take long for the market to close below our two major "lines in the sand."
In yesterday's Market Notes, we noted the benchmark S&P 500 was near two vital "support" levels. One was the closing price of the May 7 "Flash Crash." The other was the widely followed 200-day moving average. Yesterday's big decline caused flagrant violations of those two levels.
We don't like being the bearers of bad news or bearish analysis… but we know these violations will cause people to dump their stock holdings… with no regard to the value of the businesses behind those stocks. Stocks are in for rough going.
And as crazy as it sounds, the traders among us should be delighted at the coming volatility and price swings. They will create enormous valuation and sentiment extremes… which make for a rich trading environment. For instance, remember our bearish call on Freeport-McMoRan? The stock just violated that critical low.
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