The Market...
On Wednesday the market had a nice fat “up” day, closing at 2106 on the S&P. The All-time high set on March 2 was 2117. They were close enough to toss a rock and hit those highs. But Thursday they couldn’t get any follow through and we ended the day sort of soggy.
Thursday night China announced some of the worst economic numbers in about 6 years, which really shook the global markets. The idea being that China is such an important importer and exporter, that if they’re slowing quickly, EVERYONE will pay the price. But maybe something “worse” was that Bloomberg terminals around the globe went “dark” early Friday morning.
Let me explain… If you are a true money institution, you most probably have a “Bloomberg” trading platform, where you are literally connected globally to the world. That’s where news, messages, trades, you name it swaps hands thousands of times an hour. The platforms are insanely expensive, to the tune of about 20K per year, but again… there’s tens of thousands of them out there. Well, they “went down” in the wee hours of Friday morning and that REALLY flipped out the institutional traders.
Between the lousy China news and the Bloomberg glitch, the market was in sad shape by 5 am Friday. Could anything else be worse? Well yeah…evidently there was a whole lot more evidence that Greece was about to be in default once again and it brought the same chorus of “Greece is going to leave the Eurozone”. So we had three major situations to deal with heading into Friday’s open.
Well there’s no other way to say it except that Friday was a complete washout. We opened ugly and it got butt-uglier from there. At times the DOW was down well over 300 points, the S&P under its 50 day moving average and important “levels” were failing.
A lot of damage was done Friday, from a technical perspective and a mental one. It was a horrid day, much worse than even we might have expected. So the question becomes this… My opinion was that the market was going to struggle mightily at the All-time high levels. I really feel/felt that the March 2 “top” was pretty significant and even if they were going to get past it, it wasn’t going to come easy. It might take several attempts.
Yet I didn’t think we were talking about a day like Friday. I was more of the opinion that the market would bang its head against the highs, retreat a bit, try again, retreat a bit, etc. Not get smacked in one session for 350 points. Sorry, didn’t see that one coming.
So is the run over? Are we in correction mode now and the direction is down? It could be. I’m only being stubborn in believing that they might continue to try and bang away at making the highs is because 1) it’s April and April is historically a good month for the market, and 2) for years now they’ve jumped in and bought the dip each time the market has been hit really hard like that.
If we come in Monday and there’s no stabilization, and we continue to fall, the next stop would be around S&P 2060, then down to 2040. If we lose 2040, we could literally be looking at the beginning of the first really ugly correction in over 6 years.
We’ve come one hell of a long way over the last 6 years. The bull is tired and even all the manipulations and QE’s and what have you have run their course. This is a desperate time for the market, especially with some of the things we see coming later in the year concerning China and the IMF. So again, if they don’t stop the bleeding this week, and at a very minimum hold us over 2040, it could very well be time to start selling this market.
Let’s see what they do over the next couple days and especially watch the S&P. If they bounce us Monday and we get back over 2084 which is the 50 day moving average, they might quickly forget Friday’s plunge. It is certainly “getting interesting!” I’ll see you all on Wednesday.