Markets don’t lie…unlike politicians, especially those seeking the presidency. Since November 3rd, the market has struggled to hold its ground and then fell going into yearend. From their it has been down and downer. Both the indices and many individual stocks (mainly financials), have seen repeated opening gaps…almost all to the downside and with no meaningful bounce…not even a dead cat bounce (a 50% retracement).
Ah, but last Friday was different you say…no it was not, it just appeared that way. Virtually every index and most well-traded stocks rallied with a big burst in the final half hour of trading, both in volume and price, with huge volume and price jumps at the closing bell.
What does TB attribute it too? Nothing…absolutely nothing…fundamental that is! What it was was monthend following a disastrous start to the year (as January goes, so goes the market is the old saw and it pretty much happened that way last year. I was making comments to articles on Seeking Alpha, where I have penned four so far and have submitted another one on ETF’s. I warned to not put in any orders at the open on Monday or to even trade on Monday, and was proven correct. This downtrend is not over yet.
It is too early to call as to whether we are going from a bull market in a secular bear market that goes back to 2008, and is one of the longest running bulls ever. P/E’s weren’t sending out warning signals but they were at pretty high historic levels…and still are.
Stay away until the smoke clears…go have coffee, a glass of wine, or a shot right out of the Makers Mark bottle…it’s your call.
Good luck, all!