Last Thursday I commented "Crowd Sentiment is Optimistic: No Surprise to See at Least a Short Term Price Decline"
After the close that same day, I commented "Today’s Stock Market Decline is about Twice a “Normal” Move" when I concluded about the days market action "today we get at least a warning shot across the bow."
That post suggested that investor optimism had hit a extreme short term peak; a level that historically preceeds a correction (decline) in stock prices or at least low returns for a while. Indeed, it appears the former is underway. The chart below represents the S&P 500 Stock Index. It is a daily chart showing the price trend since December. As you can see, the most recent price action for this stock index shows a decline of -6% over the past 2 weeks. This same index declined about 9% in Jan – Feb before reversing back up to a higher high. As evidenced by the other posts I made last week , corrections of 5% – 10% are fairly common in a Cyclical Bull primary trend. With that said, we have reduced our exposure to loss over the last week.