A picture is worth a thousand words, even when the picture represents an ugly day on Wall Street. With the Dow being down almost 1,000 points at one time, losses were cut sharply during the last hour of trading.
Sure the Greek contagion was at the center of attention, but it appears that the latest news reports were not enough to create an outright panic.
Rumors of an incorrectly entered trade by a trader (working for a major firm), who mistyped a letter on a financial derivatives trade, may have very likely contributed to the extreme downside action by subsequently triggering other sell orders as preprogrammed machines were suddenly in charge. I’m sure we’ll find out more details as they become available.
Nevertheless, it was a down day, although I don’t give that much validity to a one-day wonder, whether it happens to the upside or the downside. As mentioned in yesterday’s post, we liquidated our emerging markets positions early this morning before the sell off stamped kicked into high gear.
Several other sell stops were triggered, and we will liquidate those tomorrow, unless the market stages a sharp rebound. At the same time, downside action was enough to trigger an outright sell signal for our International Trend Tracking Index, which covers “broadly diversified international funds/ETFs.”
The international TTI has now moved below its long term trend line and into bear market territory by -1.48%. All holdings in that arena should now be sold, although we no longer had any positions.
The domestic TTI resides still above its own trend line by +2.72%. I will post the updated charts tomorrow.