WASHINGTON –We should have noticed Friday’s negative crystal-ball action on Wall Street. If we had, we’d be less surprised at today’s Blue Monday doldrums in the US stock market. Namely, Monday morning’s general drubbing of stocks across the boards. Save for the oil patch, which we’ll address in a moment.
More on those Blue Monday doldrums on Wall Street
Notes Innovative Income Investors proprietor Tim McPartland:
“It is well known that the Monday following Thanksgiving has a negative bias so it is not a big surprise that pre-market [futures] strength didn’t last long. The dip buyers are standing aside as sell stops are triggered and the selling finally gains some momentum. There is no obvious catalyst for the selling other than the extended technical conditions.”
Oh, well. Fortunately, the tiny buys I made during Friday’s short, post-holiday stock market trading session, while down, don’t matter a whole lot right now to our portfolios. Even so, our long-term holds are generally taking an unpleasant hit as of the noon hour today. But then again, nothing goes straight up.
Dollars and sense reasons for today’s Blue Monday gloom and doom
CNBC gives us an overall sense for why the stock market got hit with a club this morning by an ornery Mr Market.
“Stocks dropped on Monday, the first trading day of December, as investors digested disappointing economic data along with the latest trade news after capping a month that featured blistering gains.
“The Dow Jones Industrial Average fell 251 points, or 0.9%. The S&P 500 pulled back 0.9% while the Nasdaq Composite traded 1.4% lower. The major averages started off the session with slight gains before turning lower.
“Shares of Facebook, Amazon, Alphabet and Apple all dropped more than 1%. Netflix traded 2.7% lower. Roku, which has been one of the hottest stocks of 2019, plummeted more than 15%.
“The Cboe Volatility Index, which is regarded as the best fear gauge in the market, rose to 14.8 from 12.6.
“Monday’s losses came after a strong performance in November. The major averages had their biggest monthly gains since June, rallying to record highs. The S&P 500 climbed 3.4% last month while the Dow advanced 3.7%. The Nasdaq rallied 4.5%.”
Stocks try and fail to recover at the noon hour
That report initially appeared mid-morning. Late Monday morning, stocks tried to shake the Blue Monday doldrums, with the Dow recovering briefly to cut its decline to about -183 points on the scale. But as we write this column, circa 1 p.m. ET, the Dow and the other averages are making a second attempt to swirl around the drain before disappearing. The Dow is currently off about 240 points.
CNBC further notes today’s disappointing manufacturing numbers.
“Manufacturing activity in the U.S. continued to contract last month, the Institute for Supply Management said. The ISM Manufacturing PMI dipped to 48.1 in November. That’s below an estimate of 49.4. Stocks hit their session lows after the data was released.”
Hope springs eternal
But one CNBC interviewee injected a modest note of optimism into the discussion.
“‘The trend and momentum going into December are bullish,’ said Bruce Bittles, chief investment strategist at Baird. ‘However, investor optimism is registering as excessive by many of the services we follow. While optimism is not euphoric, excessive investor optimism generally suggests a pause in a bull market.’
Well, that’s a good way to cover your bases.
Tim McPartland’s Monday opus offers a somewhat more ironic (but persuasive) point of view of the stock market.
“For the 1st time today I looked at the stock market numbers at 11 a.m. (CST)–wow the DJIA is off 200 points. I didn’t know stocks ever fell–in particular 2 days in a row.
“So just for the fun of it I turned on the TV (which I seldom do during the daytime anymore) and found 5 panelist[s] on CNBC arguing about the market fall–each one of them was the smartest person in the room, at least that is what was conveyed.”
Yeah, Tim, it’s a little like living where I live, on the periphery of The Swamp. Here, everyone is not necessarily the smartest. But absolutely, they’re THE MOST IMPORTANT. It gets tedious. It’s a never-ending game of “Can You Top This?”
But now, back to our regularly scheduled Blue Monday program.
Over at Real Money, which now offers at least some free stock market articles before clanging the pay gate down on you, a gent going by the name of James “Rev Shark” Deporre, offers some specific trading advice for a day like today.
“At this point, it is particularly important to stay disciplined. I have tight stops on positions and I’m letting them trigger. My cash levels have been too high lately but that is helpful today. I have some index shorts in the form of ProShares UltraPro Short S&P 500 (SPXU) and will be a bit more aggressive in trading that now.
“There is no way to know if this is the start of the deeper corrective action that the bears have been incorrectly predicting for months and weeks, but the price action says to be more cautious so that is what we need to do.
“There are a few things on my screens that are working but the momentum names are taking some hard hits and that demands attention. Focus on keeping accounts as close to highs as possible and don’t worry too much about what happens next.”
Happily, this is usually the way I work, so I’ll probably stay the course in our portfolios.
A new (to me) way to short the S&P 500 via an ETF
New info for me is that ProShares UltraPro Short S&P 500 suggestions, an ETF with the trading symbol SPXU. I’ll have to look this one up. It seems similar to a likeminded double-short S&P 500 ETF, symbol SDS. If things continue to sicken, maybe it’s time to audition this one.
The way these short ETF vehicles work is that you put on a fair number of shares to protect the shares you own but keep in your “sock drawer.” I.e.,blue chips and the like. You quickly take them off again if the market recovers. They are rarely, if ever, a long-term bet.
More Trump tariffs rattle Blue Monday traders
I’m offering relevant nuggets of stock market wisdom from others today largely because I remain somewhat brain dead following a celebratory Thanksgiving holiday weekend. But you get the general picture of today’s market. Which is also troubled today by President Trump’s re-imposition of some Eurozone-aimed tariffs as he heads off to this week’s NATO get-together.
As you may recall, the Euro-liars promised Trump they’d work on a few of their own anti-US tariffs and get rid of them. Which of course they didn’t do because they never intended to do. So before you yell at the President for complicating matters, remember that he didn’t start this round out by lying to his competitors, which the Euro-elites always do. They’re a little like China this way.
At any rate, this hasn’t helped our Blue Monday stock market sentiment either. Although, with the Saudis hinting at a possible need for more oil production cuts to hold decent pricing of the commodity, US oil and refinery shares are generally doing much better than other market sector shares today.
And now, a few snarky words about Seeking Alpha and its lousy touts
Finally, an unrelated but intriguing comment by Tim McPartland, from the article earlier cited. Tim unloads a few arrows on an online investment advisory service I used to pay attention to with some frequency. We’re talking about Seeking Alpha, which now appears affiliated with CNBC. Tim makes the following observation.
“… a nice tumble in markets would separate the wheat from the chaff on Seeking Alpha where the never ending ‘recommendations’ by some folks of total crap companies really grinds on me. With the ‘rising tide lifts all boats’ market these folks are allowed to lead the sheep to slaughter. Not that there are not some good items on Seeking Alpha, but most of the most popular writers are legends in their own minds.”
In the main, Seeking Alpha today has become a huge bore. Most writers appear to be geeks and engineering types that hype a stock or group of stocks by offering page after page of lengthy, stultifying charts that apparently are meant to serve as proof of the writer’s high seriousness. What all this tedious documentation really amounts to is the “baffle them with bullshit” philosophy well known to the charlatans that serious traders used to call “lousy touts” back in the day. It’s largely just a pile of crap that produces poor results if you buy into the “analysts'” latest bogus recommendations. All that “science” only results in another portfolio smackdown if you follow their laboriously engineered recommendations. Every day is a Blue Monday doldrums day for your portfolio if you consistently follow the verbose buffoons wasting valuable server space at Seeking Alpha.
Picking the winners?
But still, reading this site daily gives you the impression that every writer there is a huge expert, and every pick is a surefire winner. You never hear about losses from these writers, implying that they are always correct and, therefore, always brilliant.
Which is why I pretty much switch them off these days. I did occasionally try one of their recommendations from time to time in the past. But the timing was always wrong, and I lost money on every one of them. It’s nice to know that Tim is in my corner on this one as we slog our way through another edition of Blue Monday doldrums on Wall Street.
– Headline image: What did Bullwinkle (aka, Mr Market) pull out of his hat today? (Video screen capture of classic Bullwinkle J. Moose routine.) Image © Jay Ward Productions [undated]. Fair use of lo-res image to illuatrate a financial point.