U.S. stock-index futures plunged at the opening by more than 2%. As an investor, what do you do? Having a sell discipline is very important to portfolio protection and mental sanity. Our simple rules are to sell any ETF position that drops below its individual 200-day moving average or 8% off its most recent high.
Following these rules may generate some trading this week, but will also give a little peace of mind if the market continues to deteriorate.
The S&P 500 has gone four years without falling 10 percent
from a recent high. The last double-digit percentage drop, a
common definition of a market "correction,"took place from
Nov. 27, 2002, to March 11, 2003. Since then, the benchmark has climbed as much as 82 percent.
Last week, it reached a six-year high and the Dow average closed
at a record.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.