The stimulus programs by the Federal Reserve and the European Central Bank had nothing to do with stabilization. They were about inflating asset prices.

And that’s what we got. Until now. After all, if it had been about stabilization, it wouldn’t be a problem now, but it is. The Dow Jones Industrial Average DJIA, -0.87% plummeted 4.6% to 24,346 points Monday. The S&P 500 Index of the biggest U.S. stocks slumped 4.1% to 2,649 points. Both indexes extended losses from late last week.

The outlook for 2018 that we issued to clients in December pointed to liquidity, just as it had for years. But this time the report suggested that the number of buyers versus the number of sellers in 2018 would no longer be strongly skewed in favor of buyers, as it was as recently as December.

Read:The ‘double-VIX’ ETF is the most actively traded stock

A relative parity between buyers and sellers in a normal market opens the door for volatile market conditions from time to time, and that is exactly what we expect to happen in 2018.

Trading strategies

Trading strategies are going to become popular again after they were almost ignored since the one-sided rally began in late 2012, when there was the highest degree of volatility in years, which coincidentally happened amid parity between buyers and sellers.

Five simple steps to reach $1 million — really

The markets are going to stay like this — volatile from time to time — and, although eventually that could cause things to get extremely ugly, our observations tell us that the market may have already fallen enough to reverse itself higher for at least a short while.

The S&P 500 tested 2,693 points when I was typing these words. Our Fibonacci calculator had pointed to 2,763 as the first downside target, and on Monday that level broke, but the market also fell to within close proximity to the next level, which means that the upside potential now — at least in the very short term — outweighs the downside risk.

Buy-and-hold is over

Regardless, risk-control strategies are a must in this type of market environment. Buy-and-hold investments are no longer going to be as rewarding, if at all.

That’s ultimately how this process starts. Everyone has been opposed to trading the market until just recently, and now a few people are interested in managing risk with proactive strategies again, but not everyone, of course.

The bull market we have been witness to was long, and it had a massive following. That’s another reason the market can bounce back from these lower levels, and more of these people need to change their mind set for anything to seriously hit this market, but that is expected to happen.

Slumping sentiment

When investors who had been focused on buy-and-hold for so long start to look at their portfolios with an objective of taking profits, this will happen if they start to see losses. As a result, sentiment is going to start to shift, and eventually that’s going to lead to a market crash. This is going to hurt the buy-and-hold investor. Those engaged in proactive strategies designed to manage risk and make money no matter where the market goes will be able to participate just as readily during down markets.

An added degree of work is now being required. The market just declined more than it has in years, and stimulus is no longer causing the buy-side interest for global equities to far exceed the sell side.

Thomas H. Kee Jr. is a former Morgan Stanley broker and founder of Stock Traders Daily.