Equities start the day higher as panic reigns. Ebola, stocks, cold weather, pumpkin spice lattes, Notre Dame in the top 5, iPhones that bend, ISIS on the move, Mid Term elections, we are basically surrounded by the worst events to happen in 468 years. I don’t know what’s rarer right now, Kim Jong UN sightings or people who think the market will bounce. I’ve been told I only write when the market goes up so you know what, I’m gonna write every single day this week to break that streak. What in the world is going on right now? What happened to our slow, steady grind higher? I’ll tell you what happened: nothing. Nothing happened. Markets turn when they want too, on subtle things that no one expects. They are organic entities prone to punish both bulls and bears whenever they feel like it. Should you sell right now? I don’t know, is your time horizon 5 days? 5 weeks? Should you buy right now? Sure, if you’re investing for 30+ years. You think Warren Buffett woke up this morning and said “man, we gotta sell some of our names, this market has me worried. Charlie…dial up Anton and sell 100m KO” (I mean if they want to make that call I’m here!) Unfortunately there is so much technical damage to the market that I’d be hard pressed to call even a short term bottom. Apparently no one knows how to price global growth right now so they are taking it out on everything they can. We will bottom when sentiment is as bad as it gets and everything is wickedly oversold. Oh and by the way, corrections aren’t all bad. It clears out weak hands and allows clients to shop for their favorite names at a discount. I say bring it on, at least I’ll have something to write about!!
After the open, we saw a surge in volume as absolutely no one traded. Sounds odd right? I wish I could explain it but it felt quiet in our room even as the broader tape printed massive volume. Half the market participants were at home celebrating a guy who accidentally ran into the Bahamas but those of us at our desks had to endure aimless price action all day long. Weakness for the first hour, a bit of strength, then sideways thru lunch. No rhyme or reason. This tends to happen though, especially when bond guys sit it out. There’s just not enough people sitting at their desks making decisions, therefore we wander around looking for a piece of news to guide us. Since nothing stood out there was no intraday trend, thus we had volume with no direction (see…even Bloomy was confused). Couple decent winners today: CSX, AIV, SO, SYMC, and FFIV. Losers were QEP, AN, LYB, HAR, GPRO, and all the airlines. I wish I had more to report but most of the morning was spent debating how historically relevant Columbus is, whether we need to ratchet up our worry about Ebola, how ugly small caps look, whether Chick Fil A is the best fast food in America, how undercooked a good cookie should be (barely held together is the answer. If I crunch your cookie, you failed), and whether or not 200 day MAVGs mean anything. You know, normal trading room stuff.
The last hour saw the Duke Brothers get a margin call as stocks fell to their lows. I saw a tweet from the Boston Globe mentioning flu like symptoms on an Emirates plane so yea, Ebola is now a major thing (it was before, now it really is). Markets hate uncertainty and Ebola is 100% uncertainty, so the more tweets / stories / panic we have surrounding it the worse stocks are going to perform. Ebola has officially become one of the reasons for the selloff, I’m sorry but it’s true. When stocks get hit because a few people feel sick on a plane, you know you’ve crossed over into surreal-ville. Anyway, we closed on the lows, down 1.6%, a full 35 pt swoon, and anyone who says the selloff is over is just hoping at this point. Right now the S&P500 chart looks like the downhill at St Moritz, yikes. Buckle up because we’re gonna need someone from the Fed or the ECB to halt our slide. Which is pathetic right? I’m rooting for a central banker to prop up the market. I’m a monster.
Final Score: Dow: ugly. S&P500 ugly. Nasdaq ugly. Rus2k not so bad but its been super ugly.
- Succinct Summation of the Day’s Events. Columbus Day in the US, everyone home except us poor Equity traders. Ebola fears are starting to have a major impact. Markets continue to fall because uncertainty increases by the day.
- Yep: “But you can’t plan on a stock market crash every single time stocks fall. Sometimes stocks go down without an enormous crash. Were it not for the occasional correction or bear market stocks wouldn’t offer a risk premium over bonds and cash.”
- Tons of Market Breadth Charts for you with one conclusion: “My view is that the market is trying to trick majority into buying this oversold dip, as if it is the same as every other dip since November 2012. However, with Federal Reserve changing its policy, the up-and-coming rebound from oversold cod notions discussed in this article could end up being a bull trap. Therefore, instead of buying a potential rebound, I would actually consider selling the coming rally.”
- Think this guy loves his job?
- I hope to God this cartoon is correct, it would portend a bottom for our industry.
- This item actually makes me mad. I’m guessing it’s in either Brooklyn or LA?
- Ebola is really, really starting to become an issue for the stock market: “This is, by definition, a situation with an unquantifiable outcome and that it would create market uncertainty should hardly be surprising,” he wrote. “To paraphrase one of our smartest clients, ’If Ebola cases start showing up in other cities, it doesn’t matter what earnings do.’”
- How many times have you said to yourself “I’ve never seen that kind of staircase” ?
- I want one of these for my neighborhood Trick or Treating
- You know what? This is the only acceptable selfie.
- Who goes to bed after 10pm? I haven’t seen 10pm since my Freshman year.
We’ll end tonight with a unique way to open 5 beers….a chainsaw. And he doesn’t even break any of them!!
Have a good night