Market Flirting with Correction

The Nasdaq declined -2.7% on Wednesday, and the index is now -8.5% off its April highs. A correction is generally considered a -10% decline. There has been heavy selling of tech/growth stocks over the last 2 weeks, and the S&P closed below its 50-EMA yesterday. If the S&P continues to decline below its 50-EMA, the market will likely enter a technical correction, and this could happen over the next few days. Regardless, it is best to stand aside at this time. The portfolio only has 1 position left, and it will be a discretionary exit today (Thursday). The stop loss is above breakeven, so if you want to hold, there is no problem in doing so, but with 2 recent days of selling in the stock, it may be best to take profits and wait to see where the market is headed.

Rhetorically, what good news is there to create investor optimism. Inflation is on the rise; there is a crisis on the southern border; income taxes to be raised; capital gains tax to be raised; conflict in the middle east; gas shortages now and likely in the future based on the administration's policy on green energy; plans to change our voting laws (eroding confidence); potential conflict with China and Taiwan; Russian hacking of our pipeline (what happens if our electrical grids are hacked?); huge "infrastructure" spending planned for the next Covid bailout; workforce shortages as people are paid to stay at home on unemployment (where they make more than if they return to work); continued tensions with our police forces and attempts to defund them; I may have missed a few things, but economic and geopolitical turmoil creates nervous investors.