The rest of the world must hate us. Many markets dropped over 10% - ie Hang Seng fell almost 3,500 points in 2 days due to a "US recession". Meanwhile we had a holiday and today we dodged another bullet with an emergency fed rate cut to close 1% lower only. Sorry world. But look at the bright side - we'll most likely help global markets stabilize at least temporarily tonight.
We had a short covering rally most of the day from the big morning gap down. I sold most of my holdings early for some losses, only to watch them rise throughout the day. However, as a trader, I could care less. As I mentioned before, consistency is key, and I had to manage risk, even if it means taking a loss. That is one discipline that must be kept by anyone who calls themself a trader. Learning to take a loss is one of the hardest lessons to learn. Survival is key - the market will always be there, bad traders and bagholders will not. In fact, I was able to recoup some of the losses by other well timed daytrades throughout the day (besides my failed attempt at shorting BIDU).
My assessment of the current situation? The market was due for a crash this morning, which was only averted by a large fed rate cut in the early morning. My personal opinion is that the market must complete its natural course, regardless of any external intervention. We may see some stability here, but remember this:
The next time we fall, the fed is running out of juice and will not be able to "save" the market. In fact, we didn't even close green today after a 75 bp cut! What "would have happened" today is still bound to happen to us IMO. The fed really botched it up this time by cutting rates only after a worldwide collapse. In fact, the sheer enormity of this cut may be interpreted as a loss of control by our monetary system. I also don't believe that this rate cut will actually help our frozen financial system. There simply isn't any liquidity - we really need to keep our fingers crossed and borrowers need to show some integrity. Lets hope the defaults don't keep rolling in.
Short term, I think today's recovery and "mere" 1% losses will greatly boost the global market's confidence level. I expect to see a rally in overseas markets, which will then possibly spill over into tomorrow's open. AAPL guided lower and is trading down 11% after hours btw.
Keep gathering your list of loved stocks. Get ready to buy when they are completely hated. I honestly think that time is coming soon.
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