Gray Tuesday?

Let's not mince words.  The market took a plunge today on reports of lacking consumer confidence and slowing global economic growth in China and the European Union.  Though jobless claims have fallen in recent months and the markets were on a general upwards trend, there really was nothing keeping growth up, much less stable.  Many of the new jobs lauded in recent reports were created by the U.S. Census; these are temporary, average-paying jobs with no future prospects.  In addition, the austerity measures passed across Europe combined with the British Petroleum (BP plc NYSE: BP) oil spill in the Gulf of Mexico has worsened the job climate in the Southest region of the United States, lowering consumer confidence in that region as well.

What affect does this have on the mindset of the rational investor?  Given that this setback was fairly predictable (I predicted a close of the DJIA below 10,000 to start July back in the Spring), it is not unwise to treat this as the conclusion or at least maintanence of a market correction that began when the DJIA was at 11,000.  I do not predict a further decline in the DJIA past the end of this week.  In fact, the market should begin a longer upwards trend towards the end of trading this week.  My securities have not bucked the trend today; my portfolio has lost 2.6% two hours before the close.  However, I am not selling just yet.  The losses incurred today should be made up in the next week or two weeks, and then perhaps more reasonable growth will ensue.  Until then, it would be unwise to speculate on short-term gains for securities, unless you are betting on extreme volatility.