On tv and in print, commentators and bloggers have referred to today’s market action as “panic selling.” I know I don’t sound as dramatic as a purveyor of “blood on the street”, but when I look at the chart I see an orderly and consistent downward slope. Forget the data error on the Dow quote around 3:00 and the rest of the day was smooth selling. It was certainly painful, but it didn’t look panicked to me. Whenever we have a selloff, there is a great rush to define it, explain it, justify it, spin it, etc in any way that gives hope to the bullish case. But there is a danger in this optimism and while it may feel good to try to be a good cheerleader, I’ll leave that to others.

My concern on the long side is avoiding losses right now, not making new profits. Without a doubt, today provided opportunities to buy some cheaper shares but what is the hurry? I often say “there are always stocks to buy” and that will be true when there is some clarity about an end to short term selling pressure. Today we had a simultaneous decline in buying power and an increase in selling pressure. Panic selling comes in when there is an absence of buying power and a desire to sell at any price - I didn’t feel that today. Bulls are out there trying to tell you that the market is oversold (no kidding) but once again, “oversold” does not mean sold out. The idea that we can go from overbought to oversold in one day is ludicrous. If you follow Lowry’s research you know that 90% Downside Days are worthy of analysis and they often presage market reversals. However, if you read through their work, you’ll also find that 90% Downside Days are often multiple events and are no guarantee that the market will have a reversal rally immediately afterwards. The market will stabilize but I have no idea when and if you hear someone else throwing around terms like panic selling, 90% days and one-day corrections, please watch out.