A cautionary tale As Experienced reminds us, and I lived through some as well, history has shown us that in this current environment there is a good chance of a major spike down with a general market selloff due to a negative event or disintegrating sentiment. This is reinforced with the backdrop and gloom of an impending recession and economic fear, the likes of which have not even begun to hit us yet as the Fed signals they will continue to turn the screws and cool the economy further to fight inflation.
There could well be a bloodbath coming that doesn't make logical sense, where everything of value gets sold off at once with no buyers. It is like elephants trying to get out through one door. Sellers must sell to cover margins. Carnage, then capitulation.
Many retail investors now in the market have never seen or lived through one. Many are hanging out on boards like these posting nothing but hopes and over exuberance without a sense of fiscal mortality. True, I am bullish, long term, but I clearly recognize the difference, and understand the consequences of stepping into speeding traffic, fighting a trend with momentum headed in the opposite way. (Remember the arcade game "frogger".
Most others and market movers are playing it safe, and staying on the sidelines waiting for the tides to turn. That means possibly missing out on a huge V shaped bounce and a few percentage points, but they enter in an uptrend and avoid the risk of a grinding drop. With luck, the pop won't result in a dead cat bounce.
Historical market drops of major market pullbacks mostly start off with a top, and a slow bleed, like a tire losing air on the highway before the rubber finally shreds off the rim and you slide into the ditch. We are in the slow bleed phase.