Stocks hold most of last hour’s gains–and that’s important
An extremely volatile day--but the market held most of its gains into the close--and that's important if you're trying to figure out whether we've seen the last (for a while, at least) of this week's selling. Let's take a look at the Standard & Poor's 500 index as...
No fade today after market takes off on positive China “feeling”
The market didn’t reverse or fade today. The Standard & Poor’s 500 stock index hit 2656 by 10:30 and then, despite a dip that took 20 points off the index around 12:30 managed to close at 2656 for the day. That was a gain of 1.67% for the day and near the top that Monday’s market hit before its end of the day reversal. The Dow Jones Industrial Average finished up 1.79%; the NASDAQ Composite was higher by 2.07%.
“Smart Money” and shorts are skeptical on Monday rally
The Smart Money Flow Index shows that professional money managers remain skeptical of the rally. The index is near a two-year low and advanced only 1.2% on Monday, a day that saw the Dow Jones Industrial Average move up 2.8%. A Goldman Sachs basket that tracks the 50 stocks with the highest short interest in the Russell 3000 Index was up on 1.7% on Monday when the Russell 30000 climbed 2.6% on Monday–a big enough move that it might have triggered panic buying by traders looking to close out short positions
Reasons to worry about this bounce
Of course, it would be great (if you’re long U.S. stocks) if today’s bounce marked the beginning of a recovery to the record highs in place before last week’s plunge. But…It’s very early in this bounce.
So what’s behind today’s plunge in U.S. stocks?
This isn’t going to sound very technical or sophisticated but to me the day feels like one where lots of traders and investors decided that they just couldn’t see any near term upside and in the absence of that upside they decided to sell. This pessimism strikes me as a delayed reaction to yesterday’s Fed meeting and a new dot plot that showed increased sentiment at the Federal Reserve for at least two more and possibly three more interest rate increases in 2018–and more rate increases to come in 2019 and 2020. In this context the President’s China tariff proposal isn’t the killer but rather just one more negative element.
Saturday Night Quarterback ( on a Sunday) says, For the week ahead expect…
U.S. stock markets will start the week testing the significance of Friday’s 1.74% (47.6 point) gain in the Standard & Poor’s 500 stock index (and the 1.74%, 440 point gain in the Dow Jones Industrial Average.)
Extend your timeline for this rally a little on the surge in buybacks funded by tax cuts
Share buybacks surged to hit record levels in the fourth quarter of 2017. U.S. companies announced $178 billion in buybacks in the quarter. That’s the largest total announcement of share buybacks in a single quarter on record, according to Birinyi Associations. Wall Street analysts are projecting that 2018 as a whole will set a record for buybacks in a year.
The march to a yield of 2.7% on the 10-year Treasury has set off nervous market chatter–and a retreat in stock prices today
When is high too high? The U.S. stock market has been a real champ at sailing past the prospect of higher interest rates to new high after new high. But the march of the yield on the 10-year U.S. Treasury has led to a pause for thought among traders and investors. The yield on the 10-year climbed to 2.71% this morning.
Netflix rally on earnings tells us more about how complacent this market is than about Netflix
This market remains determined to rally as we head into earnings season. Look no further than the reaction to earnings from Netflix (NFLX) for evidence. The stock market could have reacted to yesterday’s earnings from Netflix (NFLX) by selling down the shares. Could have. But didn’t.
How worried was the market by the government shutdown? So much that it greeted the end of the mess with a yawn on Monday
The Standard & Poor’s 500 stock index broke lower out of the gate on Monday, the first trading session when it could react to Friday’s Senate vote to shutdown the government. The Monday open at 2809.16 was a big 1.14 POINTS (not percent) below the Friday close at 2810.30. You could feel traders shaking in their boots–although maybe that was the rumble from the #2 train passing under the exchange.
Trick or Trend: What this market needs is a little 3% dip
I’d feel better, much better, about the current market if we saw just a very modest 3% to 5% pull back in the second half of January. The U.S. stock market hasn’t produced a 3% dip in more than 14 months. That’s a historical record.
