Is Enough Baked In?

After a very scary decline and then an impressive rally, the question most investors are probably asking themselves is, where are we now?

In order to get our bearings, let's review where we've been. Recall that as of the market close on Christmas eve, the bears had pummeled the S&P 500 for a loss of -19.78% from the September 20th high water mark. Through December 13th, the decline had been orderly and fairly well contained. There were worries over this and that, but since the February/March lows had not been exceeded, a great many analysts (including yours truly, truth be told) were calling the action a garden-variety correction.

But then the bottom fell out. Over the next 7 sessions (one of which was a half-day), the S&P dove an eye-popping -11.3% as technical levels snapped like toothpicks, algos ran in high gear, and a bearish market environment took hold.

The thinking was the market was facing a triple threat of negatives that would surely end in the type of bear market cycle last seen in 2007-09 and 2000-02. It was a combination of fears over (1) the Fed overshooting again and pushing the economy into recession, (2) the trade war with China dragging on and sending the global economy into recession (or deeper into recession, depending on who you talk to), and (3) the simple fact that both earnings and economic growth were slowing both at home and abroad.

So, there it was. A bearish narrative that by late December became hard to argue with. This was going to end badly, we were told. Credit conditions were tightening - a lot as folks began to realize that a boatload of low-quality debt needed to be refinanced soon. The words contagion and systemic risk began making the ...

Read More
Comments

The Daily Decision for 1.7.19 - The Magic Words


The State of the Markets:

Well that was fun. Don't look now fans, but after Friday's joyride to the upside, the S&P 500 is up nearly 8% from its Christmas Eve low and is now down only -13 ...

Read More
Comments

The Magic Words

Well that was fun. Don't look now fans, but after Friday's joyride to the upside, the S&P 500 is up nearly 8% from its Christmas Eve low and is now down only -13.3% from the most recent ...

Read More
Comments

Is It Over? And What To Expect Next

I ended last week's pre-holiday missive with the following: "It is easy to say the bulls are due. Really due." And as if right on cue, stocks proceeded to bounce hard the following session with the Dow Jones Industrial ...

Read More
Comments

More Than Meets The Eye Happening Here

I attended a holiday gathering for one of my advisor clients on Friday evening. While everyone appeared to be in the spirit of the season, when the conversation eventually turned to the market action, the mood quickly changed.

In talking ...

Read More
Comments

Are Investors Now Fighting The Fed And The Tape?

I'm not sure whether it was the late Marty Zweig or his buddy Ned Davis who originally coined the phrase, but it appears that after yesterday, anyone long the stock market may now officially be fighting both the Fed ...

Read More
Comments

Here's Hoping Santa Makes The Trip

It was a very busy weekend in St. Louis, visiting our grandson, daughter and son-in-law, so I'm going to keep the subjective side of this report short and let the models and indicators do most of the talking. But ...

Read More
Comments

Window "Undressing" May Be At Work

The headlines blared that stocks soared Wednesday in response to improvements in the trade war. Apparently, China was making noise about a new policy designed to increase access to the country's economy for foreign companies. Diving into the story ...

Read More
Comments

Was That The Soybean Bottom?

It was another wild ride on Wall Street yesterday. Stocks stumbled hard out of the gate, following the lead of most global markets. By 11:00am EST, the DJIA was down more than 500 points, had broken below the October ...

Read More
Comments

The Good News: Valuations Are Improving

Due to system maintenance, updates to several key data/models in our indicator boards were not available over the weekend. Thus, our weekly review of market indicators will be postponed until tomorrow morning. But as the title of this morning ...

Read More
Comments

All's Well That Ends Well, Right?

The financial press reported that stocks remained "volatile" on Thursday. But since the Dow ended the day with a loss of "only" 79 points and the S&P 500 fell just 4, the attitude appeared to be, all's well that ...

Read More
Comments

Tariff Man Set The Stage, Then The Machines Took Over

I opined after Monday's "relief rally" that the move had been a bit underwhelming and that uncertainty appeared to have crept back into the market. By Tuesday morning, traders began to realize that Trump may have over-tweeted the trade ...

Read More
Comments

Reviews Average Rating          

         
5 star all the way. Your insight and knowledge is very helpful. Analysis, charts and conclusions are sound.
         
See All Reviews →