Dow -507

I wanted to say a few words about today’s market. Actually, there’s not much to say outside the fact that it was a terrible day for stocks.

Trading started weak and got worse from there. The S&P 500 dropped below several support levels and finally closed at 2,545.94 for a loss of 2.08%. That’s our 13th 2% drop this year after having zero last year. This was the index’s lowest close since October 9, 2017.

On a point level, the Dow lost almost the same amount that it did in the 1987 crash. The base, of course, is about 10 times higher.

The odd part of today’s market is that high-dividend stocks did worse than the overall market. That’s not typical on a big down day. The worst sectors were REITs and Utilities while Financials did the best. Whenever you see a divide like that, it means the market thinks rates are going up.

The Fed meeting begins tomorrow. The futures market currently thinks there’s a 68% chance for a rate hike. That’s too low. I’d say it’s closer to 90%. The futures market currently doesn’t expect any rate increases in 2019. Zero. In fact, there’s even a very tiny chance (0.2%) it sees of a rate cut.

The S&P 500 Materials, Financials and Energy sectors are now in a bear market (down over 20%). Communications, Industrials and Technology aren’t far behind.

Our Buy List had new lows today from Alliance Data Systems (ADS), Torchmark (TMK) and Cognizant Technology Solutions (CTSH).

Posted by on December 17th, 2018 at 6:49 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.