A General Malaise Continues to Permeate Our Market Environment

Equities start the day lower as a general malaise continues to permeate our market environment. One day things look good, the next they don’t. One day Europe looks ok, the next it’s headed for massive deflation. One day Cutler throws picks, the next day he throws picks. It’s hard to remain positive on the market when I keep seeing so many divergences. Small caps can’t find a bid, bonds only go up, the dollar appears to only want to go up, crude is going down (not sure if this is good or bad, leaning bad right now), the Fed is on the verge of ending QE, the US appears to be the only place that has any growth, and we’re starting to see price action act really poorly. Take a look at this Josh Brown article and ponder its meaning. Why does capitalization matter so much to performance this year? As you go down the cap list you get worsening returns and that troubles me. Healthy bull markets have broad based participation and that doesn’t appear to be the case in 2014. The question I ask myself every morning is “are we in an uptrend, consolidating, or ready to turn over?” For the longest time I answered uptrend because everything supported that theory (Transports, Financials, the Fed, Price action, etc).  I don’t think “ready to turn over” is the right answer so I’m going to move into the “consolidating” camp. What would move me into “ready to turn over”? More days like yesterday, what a disaster.

After the open indecisiveness reigned, in fact if you wanted to send a link to someone to describe today’s price action this one would do just fine. Europe pushed us to our lows (daily moves are starting to become reminiscent of 2011) but after our friends abroad boarded their trains, trains, and automobiles (double train was on purpose..) we rallied back to green numbers. Unfortunately, like the flavor of fruit stripe gum, it only lasted 30 seconds before trading negative again (it is the best 30 seconds in gum though. Actually it’s the 2nd best 30 seconds in gum, Bazooka has the title. Actually maybe Chiclets have the title. Wait, wasn’t I writing a market recap?)  So when I say “reminiscent of 2011” I’m harkening back to the days when the S&P would rally after the carnage in Europe ended at 11:30am ET.  Am I blaming Europe for our current woes? Of course not, it’s just a piece of the overall picture, but it does seem to be affecting our mornings. Winners were GILD, CVC, MNST, ALXN, and NEM. Losers were ADM, HAL, AON, CHK, DAL, and GPRO (take a look at your boy here in the WSJ!). By lunch we sat on 1,934 waiting for the latest Fed minutes.

Which, when they arrived, heralded the end of the 2014 bear market and ushered in a new age of horn filled, green screen having bullishness. Wow, what a move we saw! A parabolic rise in all the major indices as Janet and her motley crew of over educated academics said “look, we see that there are global growth concerns but you know what? We got this.” Ok, that’s a pretty big paraphrase but that’s basically what the market thought! The fact that the Fed sees global growth concerns means that they might just delay rate hikes and…ok you know what I’m getting at here, full on “Verbal Easing” (h/t to @L0gg0I on that one). Central Banker to the world?  Guess so. Down 1.4% yesterday? Up 1.8% today. Gotta love the excitement! Plus we are about to embark on the final earnings season of the year…can you feel the hype? So I still think we are consolidating, I’d need to see MAJOR repairs to charts like the Rus2k before I went back to “uptrend”. Should Fed minutes change anything about what we think about the market? Yes, they are concerned about the same things we are. That’s a good thing. Especially since their balance sheet is way bigger than ours and Janet appears to be a dove. Don’t fight the…

Final Score:  Dow +162bps, S&P500 +173bps, Nasdaq +208bps, Rus2k +194bps.

News Highlights:

We’ll end tonight with a Top 3 all-time painful fail.  This one ranks WAAAAY up there.


Have a good night.