The major indexes recorded one of their worst trading days this month, the Dow seeing now 0-8 in the last week and a half. Not recording one winning day in 8 days, the Dow, if it continues its fall from grace today will match the 9-day losing streak recorded in 1978, not something to be proud of. If only Trump would throw traders a bone! If only Jinping would be conciliatory in his rhetoric. These are certainly the thoughts going through investors’ mind but traders have faced a similar dilemma because this is not the typical downtrend. Fundamentals have been strong, the economy’s churning, and as the Fed recently noted, the job market is strong, 4 rate hikes now projected for this year.
More than anything, the monkey wrench is when the markets will suddenly shift gears, when the correction will be over, and all it takes is one utterance from the leaders of the abovementioned superpowers, and we could see the market sharply reversing course. The market is holding on to these leaders’ every word and as we’ve noted time in and time out, even though the Dow has trended lower, in a single day it could potentially rise and regain a lot of the lost ground. It would be very gutsy to go long now – and perhaps even imprudent – but by the same token, it’s hard to say that we’re talking about a technical correction if the very catalyst for the downward movement could be removed instantaneously, with the market, like a hairpin turn, soaring on any ensuing day. That’s the dilemma, the catch 22, which means you have to be ready to get out at any second if you see that the trend has turned against you.
As for Starbucks, as projected, the company saw huge movement and volume yesterday. The stock fell 3.06% on the day, volume some 340% above the average. The stock did not correct but rather, almost from the get-go, fell precipitously. And if you got in at the right time, shorting the stock correctly, that would have been a beautiful trading move. Any stocks trading room you can think of was watching the stock carefully, to see how it trended from the get-go, the opening shot. When the stock imploded, that was the time to jump!
Economic Diary: The Markit manufacturing PMI (flash) and the Markit services PMI (flash) will be released at 9:45
Market Summary: All of the major indexes ended down on the day, the Dow extending its losing streak to 8. The blue chip index fell 0.80%, the S&P 500 falling 0.63% and the NASDAQ dropping 0.88%.
On the S&P 500, eight of the primary 11 sectors ended off. Energy was among the biggest losers, falling 1.9%, industrials off 1.2% and materials shedding 1%. Yesterday was the biggest one-day drop on the NASDAQ since April 24. Trading live online and day trading live were filled with adrenaline, as the bloodbath continued.
With the U.S. now seen as being in the last stage of its economic growth or expansion cycle, the headwind of a trade war looms large. Manning & Napier’s global strategies group managing director, Jeff Donlon, noted, “We think the trade issue is going to continue to escalate, and that it could last for several quarters, if not years. Growth expectations should be reset currently, and the longer this drags on, the more risk will grow and the more the issue should be factored into expectations.” As for the dollar’s strength, he also saw that as a factor that could place a damper on growth: “This is also coming at a time when the Fed is raising rates, meaning there’s a liquidity-tightening environment that encourages the dollar to strengthen, which is another headwind. It isn’t just the trade issue, but all the spillover from all the uncertainty out there that investors need to think about.”
Hot Stocks: TNDM, LPI, CMC, RHT
IPOs: AUTL, ECOR
Have a great trading day!