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Jeff Macke: Stocks haven't bottomed yet

Stocks are set to tumble on the open on the usual list of global tensions and a pandemic of uncertainty. This comes on the heels of a day that saw the S&P 500 (^GSPC) plunge nearly 3% before rallying into the close to finish down .8% at 1,862.

For the year the S&P 500 is now up less than 1% and the Dow Jones Industrial Average (^DJI) is in the red by 2.62% and is now 7.4% off its record high from September 19th.

Does Mr. Market have your attention yet? There were some signs of a trading low yesterday. Volume on the NYSE was 944-million shares, about 80% above average. Volatility (^VIX) spiked as high as 31.

The biggest problem for bulls is that there are just too damn many of you. The AAII.com weekly sentiment survey showed an increase in self-described bulls for the week ending yesterday. An increase! That’s bad. There are way too many uncertainties out there for individual investors to be blithely buying dips.

Sell-offs are about passion. Right now just about every company that opens its mouth gets kicked in the teeth. Banks reported decent results yesterday and got stomped across the board. Bank of America (BAC), Citigroup (C) and JPMorgan (JPM) were all down more than 4%.

Netflix (NFLX) reported after the close and got pole-axed by 25% before anyone could figure out why (international growth was terrible and HBO has entered the arena as real competition).

This is where I’d normally offer some sort of encouragement to newbies. I’d tell you to think long-term and focus on your investment goals. I don’t need to do that. As long as those platitudes are dominating the headlines we won’t have a stock market low worth buying.

Jeff Macke says look out for 1,800 on the S&P 500

The truth is if you didn’t sleep last night because you’re afraid to open your brokerage statement you’re in trouble here. This is a correction. It’s supposed to be scary and not enough people are afraid yet.

There’s support for the S&P 500 at about 1,800. Look for headlines saying something to the effect of “Stocks enter official ‘correction’ mode” when the S&P 500 hits 1,817. That will get even more people’s attention. It’ll probably happen today. Don’t panic but don’t lie to yourself either. You don’t get extra hero points for calling a bottom in stocks. It’s a suckers game. Be careful out there.

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