It's almost Friday.
Although, since that really kicks off earnings season, I'm suddenly not as excited.
Just kidding, kind of. JPMorgan (JPM - Get Report) and Citibank (C - Get Report) both report before the bell on Friday. I'll be breaking it down with Jim Cramer on the floor of the New York Stock Exchange on Friday morning.
It's a Market Selloff
TheStreet's CEO tackled a tough topic.
Dave Callaway started his article with, "President Trump blames the Fed. Democrats blame Trump. Investors blame tech stocks. Scientists blame climate change. Elon Musk blames everybody." If you weren't already drawn in, how can you stay away now?
What's clear is this year's October scare has been a long time coming. Even a casual follower of the markets has witnessed for months that the new records were driven by a handful of tech stocks -- Amazon.com (AMZN - Get Report) , Apple (AAPL - Get Report) , Netflix (NFLX - Get Report) , Alphabet (GOOGL - Get Report) . The FANG stocks and their like. A little bit of healthcare. Financials and consumer stocks were not part of the party. A narrowing market must tip, eventually.
So, there's little surprise that the brutal selloff was led by the Nasdaq. Or that it came in October, a month notorious for volatility. Earnings season begins Friday and even though S&P 500 earnings are expected to come in about 20% better, it's likely this time investors will more closely focus on guidance, which is already starting out shaky.
Higher interest rates can't be ignored, though until yesterday they were. The dramatic jump in the 10-year Treasury yield to 3.25% earlier this week from just above 3% underscored concerns that when rates rise they sometimes tend to spike, which scares folks. Despite Trump's criticism, Federal Reserve Chairman Jerome Powell will keep pushing to gradually raise rates, if only to maintain the perception of the Fed's independence, which is paramount to global investor confidence in U.S. economic policy. For Powell to be bullied into a turnaround on rates would cause a much bigger crisis.
October is the market's month for storms. Anyone who can remember 30 years ago or reads market history doesn't need a report to be reminded. But it is also a month where new bull runs have historically begun. Where volatility strikes, and then plays itself out. Where even the biggest scares are nothing but annoying memories once the next leg up begins.
Jim Cramer Talks About the Market
Before you get too worked up about the market selloff during Wednesday's trading session and the Dow's plummet on Thursday morning, check in with what Jim Cramer has to say.
Cramer, fresh off of an interview with Larry Kudlow, Trump's economic adviser, takes a look at the broader market selloff and also the tech selloff.
In an earlier interview, TheStreet's tech editor, Nelson Wang, said that the tech selloff was equivalent to a "sale" of tech stocks. Cramer adds in his viewpoint.
Panic, Pullback and Pandemonium, Oh My!
TheStreet's Bret Kenwell tackled the crazy market days.
The Dow fell 800 points on Wednesday and then sank nearly 700 points Thursday afternoon. Here's Kenwell's strategies for investors.
TheStreet's own Jim Cramer has said repeatedly over the years that nobody makes a dime by panicking. That's true. When emotions set in -- particularly panic -- logic gets thrown out the window. Earnings, valuations and dividend yields don't matter. High-quality stocks get thrown out the window with low-quality names, until investors have finally exhausted themselves.
Investors should keep the CBOE Volatility Index (VIX.X) up on their screen. Generally speaking, the VIX does not spend much time below $10. Below that mark suggests that volatility is likely to pick up in the not-too-distant future.
We just saw the Dow fall 830 points the other day. Who's to say it won't fall 1,000 points on Monday or Tuesday? It's possible -- anything is. Especially these days now that algorithmic trading can drive the market in any direction it desires. That's where limit orders come into play. It's always good practice to use limit orders over market orders, (here's the difference). By using limit orders, we choose what price we're willing to pay. We don't let the market choose.
Amid the chaos, we can look at premarket pricing and futures trading. If we have a huge down opening headed our way, like the August 2015 flash crash, or we get a mini-crash into the close, there's a smart way to pounce on these "best-case buys." Place deep out-of-the-money limit orders. It doesn't have to be portfolio altering or akin to pushing all the chips into the middle of the table.
Alright, TheStreet has armed you with tools and knowledge in these uncertain times.
Use them and I'll check back in to say happy Friday.