Headlines about trade wars have been a great buying opportunity for months but the story changed today as market players grew weary of a steady diet of negatives.
Reports that the U.S. would impose restrictions on Chinese investment in the U.S. scared away the dip buyers. Several members of the Trump administration denied that this was in the works, but the market was not in the mood to overlook the issue.
It was a sea of red with around 1,500 advancers to 5,500 decliners. New 12-month lows expanded to over 200, while new 12-month highs fell to around 100. There were no safe havens today and the big cap technology names that looked downright frothy a week ago, suffered most of the damage.
There was some bounce action in the final hour as Trump official, Peter Navarro, defended the trade policies, but the market had a lukewarm response.
Action like we saw today often leads to some downside momentum as trapped bulls move on a delayed basis to protect capital. The last three times we had selling like this -- in February, March and April -- it led to several more days of downside.
The goal at this point is to do they best you can to protect capital and to work on a shopping list so you will be ready for when market conditions change. Don't worry about trying to time an exact low in the market. Focus more on waiting for a sustained trend.
The recent uptrend is in serious trouble and we are on the brink of full-fledged downtrend. This is not just another routine dip today.
Have a good evening. I'll see you tomorrow.