Dealing With The Fallout From Friday’s Dow Devil Day (Down 666 Points) – Mike Swanson (02/05/2018)

I want to talk with you about what to do now as this morning the stock market averages are gapping down hard following what some are calling the Dow’s Devil Friday when it fell 666 points.

I do not think this is time to panic, because I do not think we are on the verge of a giant stock market crash right now, but some things are going to get hit hard and we have to make sure we can handle the risks.

It’s simply been so long that the market has even dipped even 5% from a 52-week high that everyone knows that some dip at some point was going to come and so many people who need to are selling.  That’s a normal part of the markets and everyone can see the same technical analysis charts.

The stock market could end up falling 10%.  That would be a normal correction.  We’ll just have to see what happens over the next 72-hours, but I think we have to make sure that we can handle such a dip.

There have been times in the past in which I issued stark warnings on the markets and have even pointed out signs that a big collapse was immiment.

Now is not such a time.

However, I have no doubt that there will be some people that go through hell even on a normal market dip unfortunately.

People on full margin are suffering this morning.

And so are crypto currency players, because Bitcoin is dying as the Bitcoin cartel has lost price control.

At the same time the masses are losing interest in crypto currencies as they have just turned out to be a mere passing fad, because people are realizing that they serve no purpose.  You can’t use Bitcoin as money and “virtual currencies”are never going to get put into an exchange traded fund.  This weekend Mastercard and Visa announced that they will not take Bitcoins and there isn’t a single business where I live that will either.

Yes all major US credit card companis have rejected Bitcoin and won’t even let their customers use their cards to make Bitcoin buys.

Most people do not need to sell anything on the open today on a stock market gap down and probably shouldn’t but if you own crypto currencies my recommendation to you is to just dump them immediately, because they are garbage.  Free up that money to put it to work elsewhere.

If you are only in stocks and feel like you are suffering or under pressure with the gap down today it may be a sign that you are too fully invested in the stock market or on margin.  That would be an indication that you probably are indeed taking on too much risk and need to diversify and reduce your risks.  If that is the case it might be time to talk with your investment advisor or get one.

Now I’m personally not 100% long and actually have a 20% short position in something too.  My private Power Investor group knows exactly what I’m doing and planning with this market action.  I always focus on them first and Sunday morning sent them a full PDF game plan of my thoughts with charts and a trade idea to react to this market dip for when it ends, but I’m trying to also make some changes for the future of WallStreetWindow to help you more too going forward.

Instead of seeing this as a sign of the start of a stock market crash, what I see Friday and this morning’s action as a sign of is that we are actually seeing a change in the way the market is trading merely begin.  People became wildly bullish as the Investors Intelligence survey registered a record low number of bears the other week.

We have not seen a correction in the stock market in almost two years now and not even a 3% dip for the S&P 500 off of a 52-week high at all last year.

The VIX traded below 10 more times last year than it ever had in any year before.

It was unrealistic to expect that type of action to continue forever and so now it is ending.

The market is going to trade differently this year than it did last year and that is the important thing to take from this drop right now.

The VIX actually already popped up on January 30.

In some ways this action started two weeks ago and is simply picking up pace, but market dips tend to be short-lived and they also force me to analyze things AS THEY UNFOLD.

I can’t give you a prediction before the open at what price the dip will end or how long it will take to play out.

I have to analyze the stock market now day by day and even hour by hour as this dip plays out.

I can tell you though that Bitcoin should be sold on ANY bounce or rally now no matter how big it is or how weak.

That’s why you want to own things that are real and that you can believe in.  And it’s always best to be positioned EARLY in a cycle and not LATE or buy into a TOP like Bitcoin 20,000.

That also makes almost all markets very tricky now as the US stock market began it’s bull market nine years ago.  And that’s a reality we must accept and not deny like you are seeing Bitcoin true believers do now when they keep repeating the crazed predictions and claims that were so prevalent in December about it.

The hell for Bitcoin players began in December and is only going to get worse as time goes on.

Friday’s DOW devil day is likely to end up being a warning in the dark when this dip is over and the market rallies again.

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