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Lots of Reasons To Sell
08/30/2013 12:00 pm EST
MoneyShow's Jim Jubak highlights the number of reasons traders had to sell well ahead of the Labor Day holiday and he ponders what might happen once the holiday is over.
Apparently, Wall Street decided that the Labor Day weekend started on Tuesday, August 27. It really can't blame traders for deciding that they wanted to get out of the market before the holiday weekend started and get out early. We looked at the things. We've got the possibility of some kind of US led military intervention in Syria. We've got worries about who President Obama is going to nominate to be the next Fed chairman after Bernanke. You've got increased rhetoric from the Republicans about shutting down the government over the debt ceiling battle or over the budget battle; and increased rhetoric from Treasury Secretary Jack Lew about "Well, we're not going to bargain."
All that stuff makes the market really, really jittery and you've got to say, "So, why am I here? Why don't I just sell?" That's what the market decided to do on Tuesday. Going forward the question is, "What happens a week from now?"
When everybody comes back on Tuesday, after Labor Day, do we get a continuation of the selloff because a lot of these negative events will still be out there; or basically will people say "Oh, okay, so I sold off and now we need to re-establish some of these positions that I got rid of? I'm now going to be at work, so I don't need to just get out of the market, I can actually be intelligent about what I'm going to own, buy, sell, etc."
One of the problems, one of the issues here, really, is that there is not much in the way of positive catalysts to encourage somebody to stay in the market for September and October, so maybe everybody just decides that whatever positions they took off before the break, they're just going to keep off. You've also got a lot of indexes that are hovering around make/break levels. They're near support. They're about to go through support. That, again, could lead the market to decide, "well, hey, you know we're in the middle of a selloff. I don't want to re-establish positions while things are headed down."
Really, the days to watch are Tuesday after Labor Day, Wednesday after Labor Day, Thursday after Labor Day, to see, really, what happens once the market gets back to normal trading activity and whether people decide that the selloff before Labor Day really needs to continue or whether it was something that was simply a holiday selling spree.
This is Jim Jubak for the moneyshow.com video network.
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