Things to do while on the sidelines
The market dropped today, about 2% overall which is a large drop. It is part of the slide that started last Monday and it is likely to continue as there are no clear positives coming anytime soon. Earnings season will begin again in two weeks, and if the logistics and inflation issues continue, earnings for most companies will be dampened, which may make the slide continue. The next two weeks is anyone’s guess, unless the government resolves the dept ceiling, government funding and infrastructure issues.
While the market trends down, it is interesting to see that whenever we hit a particular benchmark, say the ten year interest rate rises above 1.5% or we breach the 50 or 200 day moving averages, the market fall seems to accelerates. If there is an announcement about a particular economic indicator, say an increase in inventory levels, there may be a clear positive or negative reaction. Suspicious. This looks like machines may be trading, those which have been programed to look for particular anchor points. Ironically, as long as there is no major benchmark breech, this makes me less worried about market spills. It seems like the machines are doing the damage and when people wake up and see that things are not that bad, there should be a rebound.
I saw in an article on CNBC that Jim Cramer agreed with me tonight about patience. He says stay on the sidelines. I do too. It is a good time to look instead at your whole financial picture. Where is your 401k upto? Are you happy with the allocations there or should you change them (or the amount you contribute) to take advantage of a stock sale? Have you made your contribution to your Health Savings Account for the year? Better investment than the market at this juncture. How is your spending going? Are you keeping to your budget (assuming you have one). There is plenty to do in terms of keeping your financial house in order while waiting for the market to bottom and strike a direction. Use the market lull to pull back and look at your entire financial picture. Staying too focused on the market alone when it is in a downturn, can lead to panic selling. Find a way to reassure yourself the market alone does not dictate your financial health.
Market Today: Rough for pretty much everyone. Looking to buy some blue chip tech, so wrote puts for Apple, Microsoft and Nvidia, at levels 30% below where they are trading. (I was called out on all three earlier this year so I need to restock.) Unlikely to get in at the prices I set these puts at, but if there was a sale that large, I will be forced to buy even if I feel panicked at that time. Because the VIX jumped up 24% today, the option premiums were high, so much the better.