Monday, October 13, 2014

Market close wipes out constructive day

The U.S. equity market day was one of ups and downs, always seeming to be moving toward the center, forming a base for more positive trading as this week of earnings reports develops.  Then came the last half hour.  The bottom fell out and all major averages headed straight down.  Why?

There really seems to be no good reason unless one chooses to listen to the chart followers, as I said no good reason other than a general market fear that this decline will continue.  There was no strikingly bad news today, none at all unless one case of Ebola can be extrapolated into thousands of stocks falling simultaneously from 3:30pm to 4:00pm.  What also was not there was any new good news, some news that would be additive to the market's attempt to build that base.  Transportation stocks were particularly hard hit, airlines, cruise lines, and hotel chains, based on an obvious panic of the day.

For those who have been waiting for the opportunity to "buy a dip", how do you feel now.  It appears that the inclination to buy the dip has not yet set in.  What we perhaps saw this afternoon was a type of capitulation, a "to hell with it" style of selling that had investors not waiting any longer, not one day longer, to sell what was on their mind to sell.  Still, it does not seem like the selling is over yet.  Earning reports may be or will certainly be the answer to the question about the longevity of this selling.

Tomorrow JPMorgan, Johnson and Johnson, Wells Fargo, and Citigroup are among those firms reporting.  Wednesday comes Bank of America and Netflix among many others.  Thursday provides Blackstone, Goldman Sachs, Marriott, and Schlumberger and many more.  These earnings will definitely provide facts to trade on rather than vague fears, and one could hope not fears at all.

Let's wait for more information and digest today later. 


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