Limit Up, Limit Down

The pre-market indications today are showing that U.S. stocks will open at their down limit. That, is the safety mechanisms built into the trading platforms will stop share prices from going lower than the allowable limit.  This means that the DJIA futures won't trade below the 8,224 level and Nasdaq 100 futures won't fall below 1,168.50.  This represents a drop of approximately 400 on each of these indexes.

I also heard an interesting perspective from a floor trader this morning, that it wasn't too long ago, (late 1990's) when limit-up days were pretty common.  It strikes me that it has taken a long time for the market in general to rationalize the high valuations of the late 90's.  I don't mean to imply that all stocks have been overvalued, but broad equity indexes probably have been too exposed to overvaluations.  

If you are a long-term owner / buyer of equities, the stock markets look to be a LOT less risky now.

As always, prudence and balance pay off.