The Great Angst Continues

Equities start the day lower as the Great Angst continues. Angst is a funny thing, it comes and goes (especially in teenagers) for no apparent reason. Websters calls it “a feeling of deep anxiety, typically an unfocused one about the human condition.” One day you are smiling and laughing and the next you hate everyone and everything. The U.S. equity world is suffering from angst right now and I’d be hard pressed to tell you the exact reason why. No doubt it has plenty of worries on its mind: China meltdowns, Energy stock meltdowns, breadth, how awful this Ballers show is, Transports, summer daydreaming, and a host of other things. But the angst comes and goes and I have no idea why. We’ve seen the market dive like a Los Angeles class attack sub and rise like an F-16. Puke thru the 200 day and bounce it’s head against the ceiling. So we have to ask ourselves this question: What is the primary trend? Is it still higher? At this point I would say no, it isn’t higher. It’s actually sideways and I don’t know what changes that.  Economic data is just ok, sentiment is just ok, earnings are just ok (if you take out these godawful energy names), and there’s only 6 stocks doing the heavy lifting (AMZN,, GOOGL, AAPL, FB, NFLX, GILD).  If I’m right and the market has gone into a sideways trend that makes stock picking all the more important. Index funds look great when the market goes up 30%, what happens when it goes nowhere?  The Great Angst my friends….that’s what we are dealing with right now. 

After the open it was all red numbers all the time. I figured we’d bounce after that shellacking we took on Friday but green colors were hard to find. Down we went to the 200 day Maginot line (2,064) which thankfully stopped the Huns in their tracks. Utilities and Telecom did ok but you know what sectors didn’t do ok? Energy and Materials. You know what sectors don’t do well ANYDAY? Energy and Materials. Remember when everyone thought banks were finished in 2008? It’s starting to feel that way with Energy stocks.  Literally none of them go up…ever. Exxon Mobil, the king of the energy names, has gone straight down for a year. The last time that stock saw such incredibly horrid price action was…yep… when everyone thought the banks were going to sink the world. Has sentiment reached bottom in these things? I don’t think so, for me the bottom is usually when you read headlines like “Blackstone to buy energy assets from XYZ” or “Goldman Sachs to invest in XYZ debt”. I want those smart money / PE stories where you know the best investors in the world see incredible value.  Winners today: TEVA / WAB / AGN / ATHN.  Losers:  MYL / UNFI / GRUB / RARE / S. By lunch the S&P was grinding lower because China’s overnight crash made everyone nervous (how crazy is it that the Shanghai composite dropped 8% in one day and our S&P has traded in a 6.7% range ALLL YEEAAR) 

The final few hours were slow and spent between 2,066 and 2,070. By the time the bell rang the Maginot line held (as opposed to the historical one!) but the damage was done.  2,067 down 50bps. You know what really irks me about markets?   The ridiculousness. When the Shanghai Composite went from 3,240 to 5,200 the S&P didn’t give a rip. Up 58% in 6 months while we went nowhere. Now, with the thing falling like Lehman brothers, we suddenly care?   Now it matters to us? I just hate the asymmetry of it all. Blah, now I’m angsty.

Final Score:  Dow -73bps, S&P500 -58bps, Nasdaq -96bps, Rus2k -92bps. 

News Highlights: 

We are going to end tonight with a smile!   Its summer, its warm, time to feel happy about life. 

The first video is a look at sheer determination 

The second is how awesome people can be.   I love the kid at the end. 

Have a good night.