Yet as many foreign stocks have plunged this year, the result has been much less interest in them, not more. Ditto for long-term bonds. So it's hard to understand why investors would treat plummeting U.S. stocks differently.
Moreover, stock indexes this week have fallen below key "technical" levels, triggering "sell" signals for short-term traders. Both the Standard & Poor's 500 index and the Nasdaq composite, for example, have dropped below their 200-day moving averages, important price levels at which buyers are supposed to emerge--but haven't so far.
Also, widely followed investor advisory services, such as the Huntington Beach-based Telephone Switch Newsletter, have yet to issue "sell" signals but will be forced to do so if the market declines by a couple more percentage points.
In short, even for long-term investors eager to buy, the smarter strategy now may be to stay sidelined and let the market shake itself out. Since 1990, many people have only known how to buy stocks. They've never had good reason to sell. Suddenly, they're finding reasons, and they're acting on them. It would be nice to believe that the market can neatly right itself within the bounds of a 10%-to-15% decline, but rarely do stocks accommodate the masses so readily.
The Damage So Far
How some major stocks and indexes have tumbled in the current market selloff, versus their recent highs.
52-week Tues. Pct. drop Stock high close from high Sears 60 1/8 43 1/4 -28.1% J.P. Morgan 79 3/8 62 1/8 -21.7 AT&T 65 51 3/4 -20.4 Inland Steel 37 1/8 31 1/8 -16.2 3M Co. 117 98 3/8 -15.9 General Motors 65 3/8 56 -14.3 Disney 48 5/8 43 1/8 -11.3 Intel 74 1/4 66 1/4 -10.8 Deere 90 7/8 81 3/4 -10.0 Motorola 109 3/4 100 3/8 -8.5 Dow industrials 3,978 3,699 -7.0% Nasdaq compos. 803.93 755.29 -6.1 S&P 500 482.00 452.48 -6.1
A Wicked Day for Stocks
How key market indexes plunged on Tuesday, and their declines so far from their all-time highs.
Tues. close Pct. Pct. drop Index and change chng. from peak Nasdaq composite 755.29, -17.21 -2.2% -6.1% Dow utilities 201.23, -4.21 -2.1 -21.5 Dow transports 1,675.36, -35.53 -2.1 -10.0 Russell 2,000 257.04, -5.47 -2.1 -5.2 Dow industrials 3,699.02, -63.33 -1.7 -7.0 NYSE composite 251.30, -4.20 -1.6 -6.1 S&P 500 452.48, -7.52 -1.6 -6.1
