Well! Wasn't today a lot of fun? Hell no it wasn't. But I'll tell you what it was - it was a tiny preview of the kind of down drafts that could be in store for the market over the next two months, and maybe from now through December. Best advice still is to sell into strength and accumulate cash.

As you know, the Dow was down over 280 points, before recovering to a loss of 77. Around 9:00 am, when the Dow was down some 210 points, I noted some precipitous price drops that would be just a little taste of the major castor oil to be administered later:

Sure, most of these stocks came back substantially, but that's not the point. In any prolonged downturn (several weeks to a few months), it can be very difficult to get out without a lot of pain. It's like you're at a basketball game, your team is winning handily, and you're having a great time. But this gym has only one exit, and it's only four feet high. Then someone yells fire! And all of a sudden there's a mad dash for the exit, and the first guys there are 7 foot, 260 lb. players. Lots of luck. Remember that, when you think you have a lot of time to start selling and accumulating cash.

I'm still a market bull over the longer term, and I view any market weakness as temporary, and that it eventually will become a buying opportunity. But until then be prepared. And sit close to the exit. Stay tuned.

The Market Pro - August 21, 1998