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There’s technical data… and technical intangibles. Both matter, and in this market, it was the latter that caught our attention. How could things look so dire, yet the market hold together? How could this news-driven market suddenly seem to ignore bad news? And to be clear, the market has done more than just hold together. Being up 160 Dow points Monday―the day before oblivion―is one thing. Being up with a plurality of advancing stocks is another. The intangible here is what we used to call “the failure to fail.” This market had every reason to go down, yet did not. We know tomorrow is another day, but this seems worthy of note. It’s hard to say all the bad has been discounted, but maybe at least the fury part? When the market ignores bad news, it’s good to remember ― it’s the market that makes the news.
The conflict and its consequences are just that, a two-part problem. It reminds us of first aid training from the Boy Scouts or the army, is there a difference? First, you start the breathing and then stop the bleeding, in this case stop the fighting. Then you treat the wound and treat for shock, in this case the consequences of the fighting. If the fighting is indeed over, what does that mean for the shortage of jet fuel? And what does that mean, in turn, for Airline earnings? Stocks sell at fair value, whatever that is, once on their way to more overvalued, and again on their way in turn to more undervalued. It’s the trend counts.
Up some 1300 Dow points with 5-to-1 advance/decline numbers, it’s hard to call Wednesday a bad day, and we won’t. Literally, however, the day was over in the first five minutes, the rest spent flatlining. Both the S&P and NASDAQ 100 went nowhere all day and closed slightly lower. Even the Semis, where some stocks had impressive moves, on the whole simply flatlined. It’s not to say this is necessarily bad, it is to say this is the way it is in these news driven markets. The money is being made at night rather than during the day. For a long-term investor, of course, who cares when the money is made as long as it’s being made. They say never buy an up opening in a bad market, apparently it’s even hard to buy an up opening in a good market.
Frank D. Gretz
PLEASE NOTE: Unless otherwise stated, the firm and any affiliated person or entity 1) either does not own any, or owns less than 1%, of the outstanding shares of any public company mentioned, 2) does not receive, and has not within the past 12 months received, investment banking compensation or other compensation from any public company mentioned, and 3) does not expect within the next three months to receive investment banking compensation or other compensation from any public company mentioned. The firm does not currently make markets in any public securities.
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