Some Ideas About Yesterday's Choppy Markets
Yesterday began with lots of upbeat headlines about the Dow and S&P heading for record high closes. It ended with the S&P down, the Dow up over 30 points, and the NASDAQ - which had been up too - down the most of all three averages.
The divergence between the Dow vs the S&P is unusual. The divergence with the NASDAQ hasn't been so unusual as tech companies have fallen out of favor and the NASDAQ has lots of these. When you add in the Russell 2000 (small companies) to the NASDAQ you start to conclude that money is leaving smaller companies and moving to bigger companies, specifically blue chip companies. That's a movement to "safety."
Now I'm not the only one to notice this in recent weeks, but what yesterday emphasized - at least to me - is that really, when you look at the action of the past few weeks, nothing of any significance is happening. Or maybe a better way to put it is that the markets are holding their cards tightly to their vests and refusing to give any sort of discernible signal that lets us know what's coming up in the near future - assuming markets still have the ability to show us what lies ahead.
One thing that I am noticing is that hardly anyone is right, but also hardly anyone is wrong. It's almost like there's a game being played and it comes down to tempting us to come up with some sort of interpretation of market action, and just when we do the opposite happens.
So I'm stepping back and moving to the sidelines to observe. And frankly if you don't do much, and you've got your stuff spread out in different areas, you're not getting killed. It's just frustrating to see this kind of meaningless, almost irrational activity day after day.
Of course, there are always the economists who, according to the Wall Street Journal, now see the economy really getting legs and heading for a 4% GDP gain this year. You know, with that terrible winter over, there's all this pent-up, delayed production and spending ready to explode and carry us far away from the 2007-2009 crises and ensuing malaise towards a brighter, happier world. The image certainly appeals to me, but given the fact that a consensus of economists have painted this positive picture, I must admit I'm not betting on it really happening - at least not this year.
So up 100, down 100, Dow up, S&P down, NASDAQ down even more...chop, chop, chop...it looks as if we're going to continue down this road for a while. If you've got any better, more enlightening ideas, I'm all ears.
The divergence between the Dow vs the S&P is unusual. The divergence with the NASDAQ hasn't been so unusual as tech companies have fallen out of favor and the NASDAQ has lots of these. When you add in the Russell 2000 (small companies) to the NASDAQ you start to conclude that money is leaving smaller companies and moving to bigger companies, specifically blue chip companies. That's a movement to "safety."
Now I'm not the only one to notice this in recent weeks, but what yesterday emphasized - at least to me - is that really, when you look at the action of the past few weeks, nothing of any significance is happening. Or maybe a better way to put it is that the markets are holding their cards tightly to their vests and refusing to give any sort of discernible signal that lets us know what's coming up in the near future - assuming markets still have the ability to show us what lies ahead.
One thing that I am noticing is that hardly anyone is right, but also hardly anyone is wrong. It's almost like there's a game being played and it comes down to tempting us to come up with some sort of interpretation of market action, and just when we do the opposite happens.
So I'm stepping back and moving to the sidelines to observe. And frankly if you don't do much, and you've got your stuff spread out in different areas, you're not getting killed. It's just frustrating to see this kind of meaningless, almost irrational activity day after day.
Of course, there are always the economists who, according to the Wall Street Journal, now see the economy really getting legs and heading for a 4% GDP gain this year. You know, with that terrible winter over, there's all this pent-up, delayed production and spending ready to explode and carry us far away from the 2007-2009 crises and ensuing malaise towards a brighter, happier world. The image certainly appeals to me, but given the fact that a consensus of economists have painted this positive picture, I must admit I'm not betting on it really happening - at least not this year.
So up 100, down 100, Dow up, S&P down, NASDAQ down even more...chop, chop, chop...it looks as if we're going to continue down this road for a while. If you've got any better, more enlightening ideas, I'm all ears.
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