Tuesday, April 18, 2017

With a few exceptions, equity market remains relatively stable

Market averages today were driven by some major declines in a handful of names.  The largest individual stock positions in portfolios here are not surprising --- Apple, Google(the Alphabets), Johnson and Johnson, Visa, Costco, and Facebook.  JNJ took a hit today that was noticeable.  Among the next tier of large exposures are GE, Kimberly Clark, Lockheed Martin, JPM, Goldman Sachs, Wells Fargo, and smaller caps Insteel, Hexcel, and Valmont Industries.  Goldman Sachs was whacked today after what on the surface looked like decent earnings.

When names like those two that were hit today take such material declines, it sets the overall market on edge.  An investor does not want to buy a stock one day that looks like a market leader, and then see it create a large loss within a few days.  It is a diminution of their portfolio that can likely be absorbed, but it can also be an aggravation that is taken like a personal insult.  It creates caution in the market.

JNJ and GS are both long term positions here and prior gains make today's declines feel like a normal part of ownership.  For more active traders, it could sting.  We watch for more reactions in the next few weeks to any earnings misses, wondering how punishing the market will be.

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