Thoughtful Thursday

Equities start the day higher as Mr Toad’s wild ride settles down a bit. We got Madhouse Monday, Turnaround Tuesday, Wild Wednesday, , so right now I’m praying for a Thoughtful Thursday.  Why is the market of a sudden winging around like it’s head got chopped off? Well, to be honest, that’s just how all of this works. Slow periods of gains are interrupted with violent periods of selling. The market doesn’t move like a sine wave, it moves like that mark on Harry Potter’s forehead (h/t Cullen Roche). What are we so worried about right now? Global Growth. How is it expressing that worry? By focusing on the Bond market, particularly the 10yr yield (I hope you can see TWTR from your desk, I got a lot of quality TWTR links tonight). This kind of singular attention happens every now and then but it doesn’t persist. Remember when we cared about Greek Debt? Ebola? Crude Oil? Yea, all of things were at one point a major concern for stock investors only to be forgotten about a short time. Is this selloff over? No one knows, so let’s do a quick check of sentiment. AAII Bears DOUBLED, which is an eye opener, but if we use the broader based NDR Crowd Sentiment poll (my favorite) we see that sentiment didn’t really wash out like it did last May-June so I guess there’s not much to go on there. Could we head lower again? Sure. Could we head higher? Sure. See why market timing is so hard (and dumb)??

After the open we got a rip roaring rally that took us above where we closed on Friday. You hear that? Wiped out the entire selloff that we saw earlier in the week. Now I was debating posting a chart that shows some of the best days in the market follow the worst days but my readers already know that because they’re super smart. I love you guys. Did I mention that your behavior as an investor is 10000x more important than “macro forecasts” or worrying about what the market is doing on a day to day basis? No? Well I just did. Speaking of behavior, NAAIM measures active investor exposure to the stock market and, get this, it had its single biggest weekly drop since 2013. I hope this puts to bed the notion that the stock market has “deep seated bullishness”. A 6% selloff from the highs and people ran out of the room like Costanza at that birthday party. Winners were AMD, SYMC, ADSK, and a whole host of other tech names. Losers were FOX, UA, PRGO, and KHC. Poor KHC, I guess KRANCH and MAYOMUST never really took hold? I’m shocked. What’s that? They see Soy Sauce in China as a growth opportunity? Wait…

We closed at 2,938, up 1.89%, and at this point new all-time highs are back in our sight. So does this mean the “all clear bell” has been rung? Nope, I’m not here to tell you that. We might make news highs, we might fall back to the lows, and we might go sideways. This blog exists to remind you that the market can and will do all sorts of crazy things (and that it’s ok to laugh about it every now and then). What truly matters is how you ACT when the market freaks out because that will largely determine your success as an investor. You know who helps people like you avoid costly overreactions to random market panics? Advisors, we got a bunch of really amazing one’s here at Baird. They sit a few floors down from me and think about the markets and investing the right way. Now if they’d only buy me lunch from time to time I’d sing their praises more. CHICK FIL A PLEASE. 

Final Score:  Dow +1.43%, S&P500 +1.89%, Nasdaq +2.24%, Rus2k +2.10%   

News Highlights:

We’ll end tonight with my old pal Fail. How I missed thee (the pumpkin at 3mins is so funny)

Have a good night