As discussed last weekend at length, the markets are currently exhibiting all the traits of a “correction action.” During these discussions, I have reiterated that you should not “panic sell” into the decline but instead take a disciplined approach to exiting the markets. To wit:

“I know as I write this, that come Monday morning my inbox will be flooded with emails asking if it’s time to go to ‘all cash.’

No. I NEVER suggest being in ‘all cash.’ From a management standpoint, this is never a good idea. Trying to ‘time the market’ is impossible over the long-term and leads to very poor emotionally based decision making. However, as I regularly write, it is our job to reduce portfolio risk to manageable levels to preserve capital over time. We can do that by increasing and reducing our exposure to equity-related risk by paying attention to the price trends of the market.

By the time the markets register important “sell signals” denoting a change from the bullish to bearish trend,the markets are generally oversold from the previous selling. This is, as shown in the chart below, always the case.”

….for more analysis and more larger charts go HERE

….for more analysis and more larger charts go HERE