When it Rains, it Pours!
Natural disasters, from hurricanes to tsunamis and earthquakes, were the hot button topics on investors’ minds as trading closed last week. All eyes now are peeled on the development of the powerful hurricane, Irma, which has sowed further damage in the U.S. Indexes indeed lost altitude this past week, but when considering the flow of negative news reports, the market’s response was indeed reserved, arousing nothing less than astonishment.
When it rains, it pours. In other words, troubles come in bundles! Last week kicked off with investors anxiously following the mounting geopolitical tensions between North Korea and the U.S. after the former had just completed a successful hydrogen bomb test. The ink hadn’t yet managed to dry on the missile test, or Hurricane Harvey, which caused estimated damage of $160 billion, and another crippling natural disaster swept through town, Hurricane Irma, forcing America to confront economic damage that could reach $200 billion. Analysts at Goldman Sachs released a forecast over the weekend that says that these natural disasters could shave 0.2% off GDP. And a Category 8 hurricane struck Mexico, the latter bordering the U.S. on its southwestern border. The hurricane created tsunami waves that claimed tens of casualties, hundreds injured – huge economic damage wrought.
Investors rushed this past week to free themselves of the stocks of insurance companies, which are expected to shoulder huge outlays to insured parties because of the sheer damage caused. That notwithstanding, on Friday insurance companies corrected significantly. Of the stocks that stood out last week, we’ll make note of XL, which ended the week sharply off by 5.84%, after having already fallen oven 10% leading up to last Thursday. TRV and AIG each fell to new yearly lows, and only a sharp upward correction on Friday prevented steeper weekly losses.
Other sectors hurt by the latest natural calamities included airline, hotel and leisure firms. The stormy weather in the Caribbean led vacationers to cancel their getaways on the luxury cruise liners of Carnival Cruise (CCL), which fell 5.63% on the week. Airline companies traded off, too, against the backdrop of cancelled flights due to inclement weather. Take for example United Continental (UAL) which closed the week at a yearly low, sharply down by 5.8%. The stock of the airline company, JetBlue (JBLU) fell 5.6% for the week.
It’s easy to understand why so many bears believe that the stock market is on the verge of an avalanche. The bears are putting forth a long and cogent list of reasons why things will turn sour: the latest natural disasters, an expensive market yet to see a correction in 18 months, central banks, growth that’s been no more than moderate and September’s negative seasonality. It could be that precisely because so many investors are feeling just this, a downfall in the market has been late in coming – and to date, has been yet to develop.
What could cause players to flee the market? Nuclear bombs and natural disasters have been shrugged off, with the chaos set off by the Trump administration persistently receiving nothing less than applause.
There’s no easy answer to these questions, but a discerning inventor also doesn’t need one! Use price movement as your GPS for navigating these times. Price movement will tell us when the time has come to start being concerned. It doesn’t matter what you’re thinking; as ominous as things may look, the charts are simply painting another picture.
Weekly Summary: The S&P 500 fell 0.27%. The Dow Jones ended off 0.58%, the NASDAQ losing 1.36%.
|Tuesday||6:00||NFIB Small Business Optimism Index||104.8||Medium|
|Thursday||8:30||Consumer Price Index||0.4 %||High|
|Thursday||8:30||Jobless Claims||300 K||Medium|
|Friday||8:30||Retail Sales||0.1 %||Medium|
|Friday||8:30||Empire State Mfg Survey||19.0||Medium|
|Friday||9:15||Industrial Production||0.1 %||Medium|
|Friday||10:00||Business Inventories||0.2 %||Medium|
|UNFI||United Natural Foods, Inc.||PM||Wednesday|
Today’s Picks – Day Trading!
New York Strategy Swing
Today’s Picks – Swing “New-York Strategy”
No.1 – EVH
|Company Name||Evolent Health|
|Sector||Technology | Healthcare Information Services|
No.2 – XRAY
|Company Name||DENTSPLY SIRONA|
|Sector||Healthcare | Medical Instruments & Supplies|
Risk Rates: Normal – Regular size, High –Consider reducing size, Low – Consider increasing size