The contagion news continued to worsen last week, and stocks continued to head south. You’ve probably already heard that it was the single worst week in the market since the Lehman bankruptcy and the worst four-week stretch since November 1929. Where it looked as though the averages might have put in good short-term lows with the reversal on the previous Friday, those hopes were dashed when the market gapped lower on Monday’s opening.
Goodness gracious! Again last week, the market shook our nerves and it rattled our brains. That market action can drive a man insane. Last week was the first since late-1929 in which all five trading sessions had a gain or loss of more than 4%. Three of those days included trading halts early in the session. Don’t let it break your will.
Now that our clocks have been sprung ahead, our hearts and minds can turn to baseball. With Spring Training about half completed, and, oh yeah, with markets in turmoil, a baseball analogy might be a good way to explain the market’s recent extreme back-and-forth volatility.
Imagine throwing a baseball while underwater. It probably wouldn’t go very far. If two people were playing a game of catch underwater,
Last week, the market changed. The corona virus news introduced a whole new level of uncertainty. In such a circumstance, fundamentals go out the window and technical considerations drive market activity. A market that had been awash in liquidity and focused on stocks with rapid revenue growth and expanding earnings multiples suddenly morphed into a market fixated on technical factors. This same transformation occurred two years ago and again in late-2018.
Don’t let this week’s market headlines strike panic. If you consider percentages vs. points, the SARS virus and 9/11 triggered 12-13% corrections in the market and that is roughly the percentage pullback we’ve had to date. We urge you to resist the urge to sell now. We don’t know if the next news on the coronavirus will be positive i.e. things are getting under control or negative,
Market activity over the past few weeks has been dominated by reactions to developments in the spread of the coronavirus. It’s reminiscent of how the market responded late last year to the yin and yang of news on progress in the trade talks with China. Even the flimsiest hint of good news could launch the averages higher. When the occasional splash of bad news hit,
In last week’s article, “I’m Not as Sick as I Look,” I suggested that the damage in the market in the previous week was perhaps not quite as bad as that weekend’s headlines made it sound. Markets in the U.S. had succumbed to a nauseating plunge on the previous Friday. Financial markets around the world were suffering the effects of concern over the spreading coronavirus.
The stock market was in the peak of health through the first three weeks of the year. In fact, it had chalked up a 15+% gain from early-October to its high just after mid-January. But it was beginning to look a little green in the gills the following week when news of the widening coronavirus outbreak infected the averages. Its condition worsened considerably last week,
The stock market was in the peak of health for the past several months. Since coming off its early-October low in the mid-2800s, the S&P 500 Index (SPX) made a new high later that month and continued its merry jaunt into the low-3300s by mid-January. The result was a fairly spectacular gain to date of about 16% in just three months. Unfortunately,
I got a great time-saving idea late last week from an article by Jason Gay, a Wall Street Journal columnist. I simply need to create a smart key on my computer that, with one key stroke, instantly types out, “The major averages all hit new highs again last week.” I hit one key instead of about fifty! My typing proficiency is demonstrably substandard;