Succinct Summations for the week ending October 26th, 2018 (plus market timing)

Below please find the usual weekly summation.  On the plus side, GDP for Q3 came in higher than expected and durable goods orders actually increased instead of the expected decrease.  The negatives include new home sales and inventories coming in under expectations. The bonus this Sunday evening is another instructive graphic which, in one simple eye-shot, illustrates a concept that most of us are already well familiar with -- that overall most of those who try to time the market do not do nearly as well as those who don't.  The more timing that goes on, the more the best market days are missed.  Hope everyone had a great if wet and cold weekend. 

Does trade cause growth? - Our World in Data

While we wait until Monday to see whether this week's slide continues or begins to turn around, I found this very instructive article and graphic today that pretty clearly illustrates that there is a definite correlation between global trade and domestic GDP.  Looking at data going back to 1945, the inescapable conclusion is that the more trade you have with other countries, the higher your own GDP goes.  It's a quick read and an even quicker eye-shot.  Keep enjoying this pre-Halloween weekend.  Stay warm and dry.

S&P 500 ends at lowest since May as tech, internet stocks tumble

It was mentioned yesterday that because both Amazon and Google turned in bad Q3 reports after the closing bell on Thursday, that there might be another major sell off today.  That’s exactly what happened, another very bad 3-digit loss that brought the entire FAANG group down, put the S&P below the 10 percent correction level, and the Dow back in the red for the year.  This was all despite the fact that there was a bunch of good economic news today.  GDP growth slowed less than expected, consumer spending was at its strongest in four years, there was a surge in inventory investment, and the VIX did not go up again.  The other good news is the consensus that the tech sell-off was caused by elevated valuations, which makes it a good thing.  Investors continue looking for bargains but there’s no getting around the market jitters caused by tariffs, inflation, and the midterms.  Volume was very high at 10.2 billion. 

Wall St. rebounds after upbeat earnings, bargain hunting

After yesterday’s really big rout, today was quite the bump with investors regaining some faith when Microsoft turned in a sterling report and the market decided Wednesday’s big sell off was an overreaction and started buy tech again like crazy, raising that sector’s index by nearly 3 percent.  Other big Q3 reports included giants Ford, Visa, Whirlpool and Twitter.  The Dow was actually up over 500 points as late as 3:30 but slumped in the last few minutes to close at a +401.  The rally may also have been triggered by the fact that the recent slumps have devalued the S&P to a 2-1/2 year low so there are lots of bargains out there.  Once again, despite the bads news and nerves, the Q3 forecast has been raised again today, this time to 23.6 percent.  This compares to 22.4 just yesterday and 21.8 two weeks ago.  Some bad news:  both Amazon and Google turned in bad Q3 reports after the closing bell.  Are we looking at another sell off tomorrow?  Volume remains brisk at 9.2 billion. 

Nasdaq confirms correction while S&P and Dow erase 2018 gain

It was another major drubbing today which really clearly articulates how fragile investors are when it takes just a few companies turning in a not-so-great Q3 to begin another round of major panic selling.  Today it was techies Texas Instruments and STMicroelectronics issuing reports warning of slowing demand.  That combined with yesterday’s disappointments from Caterpillar and 3M proved the straw that broke the investors’ back.  The chipmaker index took its biggest tumble in four years.  There was also bad news from both housing and U.S. factories, all blamed on rising costs and prices due to tariffs and interest rates.  Actually the day started over a hundred points up before starting the all-day slide with the range between the high and the low almost 800 points.  But here’s the deal.  Despite the 608 point rout, despite all the bad news, the forecast for Q3 not only did not fall but actually rose to 22.4 percent, up from 22 just yesterday and 21.6 two weeks ago.  So go figure.  Despite all outward appearances, there is still a great deal of optimism out there.  Volume was again very high at 9.6 billion.  

Wall St. extends recent fall but ends well off day's lows

The bad news is that the entire day was in the red.  The really bad news is that the Dow dropped almost 550 points right out the gate.  The good news is that it steadily if choppily rose throughout the session to recoup all but 125 points.  What triggered the big sell off this morning was predicted yesterday.  The giants reporting in this week would determine a good or bad Q3.  The first two giants to report in this morning – Caterpillar and 3M – unfortunately did not deliver expected revenue and profit-growth and this was attributed largely to the trade war, reigniting all the worries investors have about the market in general.  But as the session progressed, good news started filtering in giving investors cause to believe the news may not be so bad and start buying again.  Despite the initial panic, projections for Q3 profit growth remain unchanged at a vigorous 22 percent and volume was very high at 9.1 billion.  

Dow, S&P fall as earnings season picks up; tech boosts Nasdaq

It was another very choppy trading day swinging back and forth in a 330 point range and, for a brief instant at the open, it was even over a hundred in the black, but then started its downward seesawing to close 126 down.  What is happening is the biggest Q3 reporting week coming up with giants Amazon and Google, among others, determining whether Q3 will be boom or bust and investors hedging their bets with some early selling before any potential bad news.  Still, the forecast remains very optimistic at 21.9% growth but concerns over trade, interest rates, and the global economy continue to haunt.  The good news is that both the EU and China bounced back today, especially with Moody’s giving Italy a thumbs up.  But the consensus remains that uncertainty and volatility will rule at least until the midterms.  Volume remains vigorous at 6.9 billion.