Wow, what a meltdown in the markets today. Funny how a 9% down move in the S&P doesn't spark panic anymore. It was combination of alot of things that came together today to spark this massive sell off. Of course the massive rally prior to this sell off had something to do with it. The China news that showed Chinese manufacturing just utterly collapsing had something to do with as did the U.S. manufacturing data, Meredith Whitney's words, black Friday retail sales, poor construction data, coming jobs report this Friday to name just a few. You also had the start of December which often is tax selling season (there is alot that can be sold to lock in tax losses) and then one theory I had last week that I kept forgetting to write about, pension fund rebalancing. Everyone talked about it at the end of October and we had a large rally but no one talked about it in November. Supposedly because it was all done in October but in October I was talking to the head of a state pension fund and he said the problem was so massive that he thought alot of players would not do it all in one month. So last week buying could have also been sparked by some residual rebalancing.
800 is still my number. This pullback was natural, though dramatic and not something I expected in one day. If we break 800 all bets are off. Goes back to something I said on Wednesday (maybe Tuesday) that if your buying at the close you got it backwards. You could not be buying last week Wednesday or Friday. You had to be selling or sitting tight. Today I bought a little of a name I like on the long side. Do opposite what you emotionally want to do.
Tomorrow is going to be interesting. This pullback if even violent was natural. Below 800 and I think the game starts changing. I am not trading. My purchase today as small as it was, is intended for the long term. We are in no man's land in good risk reward trades.