For anyone watching the stock tickers yesterday (and maybe today…), it was ugly. Dropping over 2%, the stock market had its worst day of the year so far, with the S&P 500 and Dow Jones posting their worst day since last August. Brought on by poor employment and manufacturing numbers and exacerbated by Moody’s downgrade of Greece, the drop has been a long time in the making, in our opinion. In May alone, 28 of the 35 economic reports that came out were negative, and yet the stock market kept chugging along.

Now, typically, we aren’t the ones to see one bad day in stocks and assume the bear market is on (although we would love to see that). But Josh Brown over at The Reformed Broker shared a Kimble Charting Solutions graph that points out an eerie similarity between the ramp up to the credit crisis and our current economic state. We’ve been saying for a while to diversify now – not after the market crashes- and this is yet another shot across the bow to those long the stock market. [Click the chart to enlarge]

[Past performance is not necessarily indicative of future results]

What the data shows is a repeat of the split between high yield funds and long bonds. It started back in 2006, when people were just beginning to question what was driving stocks and when it would give out, and we all know how things played out in 2008.

We’re hoping that things don’t blow up for the sake of the average person’s 401k, but at the same time wouldn’t mind seeing another big leg down in stocks (a la 2008) to really push the point home that you need something other than stocks and bonds (ahem…managed futures) in your portfolio.

And, as we have contended since the beginning of the year – we think the returns for managed futures will come from down trends in commodities this year, not from ever higher highs. Another down leg in stocks would be just the catalyst for grains, energies, softs, metals, and more to retrace a good portion of the large move up they have made since 2009.

Check out our old newsletter for more on historic managed futures crisis performance here.