Daily Market Update – January 28, 2016 (Close)
Yesterday was another in what has become the pattern of disappointments.
While last week did finally see 2 back to back days of nice gains, ever since hitting the post-August recovery high at the beginning of December, the market has been on a real downward spiral.
While I have always liked to pick up stocks on those kind of big downward moving days, we’ve had lots of those over the past 2 months and I’ve found very little justification for buying.
Bargains have just been getting cheaper and cheaper on an almost daily basis.
Every time there’s been the slightest sigh of breath that maybe the market was bottoming out would come a day like yesterday.
Yesterday, though, was a little different from most of the rest of the days of the past 2 months.
This time, instead of oil or China being center stage, it was the FOMC Statement release that ruled the day.
That’s the way things had been each month for the prior few years, but lately the FOMC hasn’t done much to really set the tone.
Yesterday it gave absolutely no indication of anything, but may have kept further interest rate increases on the table, even as there is little evidence to suggest that December’s rate increase was warranted.
Investors didn’t like that and they showed that dislike immediately and in a big way.
This morning’s early very mild gain meant little, especially as they became mild losses as earnings started to be announced at 7 AM. Today is actually the single biggest day for earnings reports, so maybe there could be a catalyst ahead, but it wasn’t at 7 AM.
Unfortunately, not every company can be Facebook and equally unfortunately, Facebook’s fortunes say nothing about anything other than Facebook and maybe its competitors.
Their great revenues and earnings reflect nothing upon the economy, other than maybe spending going on in Palo Alto and its suburbs.
This looks like a second consecutive week of no trades.
Just like last week was a first, having two consecutive weeks of no trades is another and leaves me very frustrated in looking for some income opportunities.
The reality has been, however, that for the first time since 2009, the meaning of “value trap” has been reflected in the market itself, not just in individual stocks.
Just as the Shanghai market is now 25% lower for the year, there is an unusually large number of stocks that are that much lower than their 2015 highs and they may still not really be bargain priced.
It will obviously take more than a good day, or even two, to start feeling a little confident in parting with cash at this point.
Today turned out to have some positive things about it as the market beat back two attempts to see it go lower. Instead, the market was able to finish decently higher, although as has been the pattern, the recovery wasn’t anywhere really enough to offset the loss from the day before.
While I’d like to be spending some money, the strange thing is that I found it easier to spend money in late 2008 and 2009 than currently. Back then the market indexes were down so much that you had to think that we were getting near a bottom sooner rather than later.
Now, those indexes are still fairly high, because of those handful of stocks creating an illusion of better health than is really the case.
I’d rather not get caught up in an illusions vortex, but a few good days, could make it easier to develop some confidence.