Equities finished the day substantially lower today, following poor readings from the Philadelphia Manufacturing Index. This is substantial because it appears that, with the close nearly 40 points below yesterday's close, the SPX has broken any support levels that previously held it in place. The equities sell-off also prompted traders to reduce positions in precious metals, when, in theory, this news should have been bullish for these commodities. This appears to be the beginning of a multi-year sell off, and the data offers little reason to believe that this correction will be less severe than that which began eight years ago. While a 30% decline in the SPX may be appear unlikely to many long investors, the chart shows more exaggerated moves have occurred in the last decade, during a crisis that did not have as strong roots as the housing/wealth effect/consumption decline we are currently in the beginning of. I do not believe it is too late to go short, and today proves that this bear market will have longevity.
Short SPX, Long Gold
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