WASHINGTON. My increasing disgust with October’s wild and pointless market gyrations in most US stocks leads me to reminisce. It all reminds me of a comic refrain from that popular old 1950s TV sitcom, The Life of Riley. Played by William Bendix, Chester A. Riley — the series’ eponymous working class lead — frequently found himself in a pickle of others’ making. Mired in his latest mess, Riley, in his finest working stiff accent, would exclaim in disgust, “What a revolting development this is!”
Well, that’s the way I imagine most serious investors are beginning to feel at this point in October 2018. The market nastiness I originally expected in September has arrived in force this month. Investors – as opposed to day traders – are being forced to endure the second market debacle in US stocks of the year. That’s a revolting development indeed.
US stocks get pancaked again
Wednesday finds us slogging through another miserable day on Wall Street. The major averages are tanking again as US stocks take it on the chin. Or whatever is available to hit. Oh, sure, they try to rally back, just as they did yesterday. But as of 2:30 p.m., it’s looking like an instant replay of Tuesday. Except not quite as fun.
As I type this article into the computer, we find the Dow Jones Industrials struggling to find at least a flatline close today. After a bit of indecision, the Dow actually tried to go up not long after Wednesday’s opening bell. But the bears arrived in force, and the Dow quickly plummeted some 300 points before spending much of the day meandering in the negative 200s. Far worse action is unfolding in the S&P 500 and the tech-heavy NASDAQ, down 1.2 percent and 2.27 percent respectively as we hit the 2:38 p.m. mark.
The Dow for its part keeps trying to get its head above water. It’s currently gyrating around the negative 140 mark, off a little more than 0.50 percent at the moment. But all these numbers will change I know not where by the 4 p.m. closing bell.
The Tylers weigh in on today’s chief revolting development
The “Tyler Durdens” of ZeroHedge have a pretty nice analysis of what’s likely ailing US stocks this month.
“Spooked by fears about peak profits, the slowing Chinese economy, Trump’s tariffs, ongoing political turmoil in the UK and Italy, and ongoing jitters among systematic, vol-targeting [volume-targeting] funds, on Tuesday the S&P tumbled as much as 2.34% in early trade – a drop which almost wiped out all gains for the year – before paring losses and closing only -0.55% lower. The drop pushed the S&P’s decline from its September highs to 6.5%, two-thirds on the way to a technical correction.
“However the relatively stability at the index level has masked turmoil among individual names where some 1,256 stocks hit 52-week lows, while only 21 establishing new highs.
“More concerning, and a testament to the tech-heavy leadership of the market concentrated amid just a handful of stocks, is that while the broader S&P 500 index has yet to enter a correction, more than three quarters of all S&P stocks – or 353 – have already fallen more than 10% from their highs. Worse, of those, more than half 179 have already fallen by 20% or more from their highs, entering a bear market.
More technical horror
“The reason why the broader index has so far avoided a similar fate is because Apple, whose $1 trillion market value makes it by far the most heavily weighted stock within the S&P 500, has fallen only 4.6% from its October 3 record high. That has helped the S&P 500 itself stay out of correction territory.
“Broken down by sector, the S&P 500 materials index – the closest proxy of Chinese economic growth – has fared the worst in October, leaving it down 19% from its 52-week highs, with the utilities index is the outperformer, down just 5 percent.
“One day later, and despite widespread call for an imminent market bounce, traders remain completely ambivalent as today’s market cash open action shows:
- Half of S&P 500 stocks rising, half falling
- 5 of 11 S&P 500 groups rising, 6 falling
- 15 DJIA stocks rising, 15 falling”
“Meanwhile, the Nasdaq has a more negative tone with decliners outpacing advancers. In other words, as Bloomberg’s Andrew Cinko writes, ‘there’s no follow through on either the upside or the downside after yesterday’s epic rebound. At this moment, he who hesitates isn’t lost, in fact, he’s got a lot of company as stock market pundits engage in verbal duel over where we go from here.’”
US stocks look like they’re in correction territory
Yeah, it sure looks like some kind of correction is upon us. That’s a revolting development if I ever saw one. This should have happened in September when things looked wobbly. But the current nasty market did develop after all in the fullness of time. And in the right month, since October tends not to be a big winner either.
Given the looming chasm of Election 2018, there could be some political games going on with current trading action in US stocks. Whether this part of the negative balance is real or fake-trading is up in the air at the moment. As is unfortunately true, “fake-trading,” as opposed to fake-news is all too real, as people or their high-speed machines actually have to trade all these shares, or big moves simply don’t happen. Maybe a better term for some of the October action would be “manipulation.”
Widespread revolting developments around the world
At any rate, cosmic uncertainty looms for investors, an uncertainty that includes worries about the following.
China trade spat
- The China trade spat, which is fast growing into a high-tech version of Cold War II. The Chinese government has been stealing America’s business and technology leaders blind in a variety of ways, the better to more rapidly industrialize without having to expend R&D dollars. They just steal ours. That’s really the issue here. Meaning that the U.S. tariff regime, along with China’s response, is going to go on for a much longer time than anyone anticipated.
Partisan madness and wealthy socialists
- The hyper-partisan madness, led by the nutcases on the fringe of the Democrat Party – who now effectively run that party – and mega-wealthy, top-down socialist villains like George Soros and his Silicon Valley acolytes. Together, they want to destroy the U.S. and the mighty economic system we’ve all built. If any voter – even a Democrat voter – thinks otherwise, it’s time to wake up. Trump is not kidding when he tells his supporters that we’re dangerously close to becoming another Venezuela if we vote the wrong people in.
Here come the “caravan(s)”
- The “caravan.” Or shall we say “caravans.” Who knows. The President jumped the shark, to some extent, by blaming Washington’s Democrats for instigating this assault on our nation’s southern border. But the Democrats certainly have no problem with what was probably funded by an underground cadre including Soros, the Chi-coms, maybe the Rushkies, and possibly the Venezuelans as well. Although as to the latter, I have no idea where they’d find any money to do this at this point.
The interest rate hike-happy Fed: Remember 1937, anyone?
- Last but not least, we seem, somehow, to be stuck with a Federal Reserve that thinks the asinine interest rate hikes their predecessors imposed back in 1937 – the ones that killed off the beginnings of a recovery from the Great Depression – would probably be a good idea in 2018-2019. This is what happens when you have a bunch of eggheaded guys and gals make decisions by computer algorithm. These people have no idea what’s happening in flyover country. This one, like China, is likely to play out slowly, but more disastrously. It could end up being the most revolting development of all.
Climbing the wall of worry is getting dangerous
All these worries hover over today’s markets. That’s why the selloff in US stocks continues apace. Apropos of which, the Dow is now plunging again as of 3 p.m. America’s big stock average is off roughly 325 points and sinking for a 1.28 percent loss. The NASDAQ is now approaching a 3 percent single day loss, down a whopping 220+ points. And the broader-based S&P 500, perhaps the best bellwether of all, is off 51.6 points, down nearly 1.9 percent thus far.
Again, guessing where today’s action ends up at the closing bell would be foolish. But until this pattern of tsunami after tsunami of selling is finished, your best bets are probably to the downside. Were you fortunate enough to stay mostly in cash? If so, it’s a good idea to remain there until someone blows the all-clear signal. If not, maybe lighten up a bit. I am. Reluctantly.
What a revolting development this is!
(UPDATE: The Dow is off nearly 450 points as of 3:35 p.m. The NASDAQ is losing 3.5 percent of its value at the same time, while the S&P 500 is off 2.33 percent. Last-minute recovery chances for US stocks Wednesday are shrinking by the minute. Another revolting development.)
— Headline image: Circa 1956 photo of William Bendix as Chester A. Riley and Wesley Morgan as his son, Junior, from the television program The Life of Riley. In this episode, Junior decides to quit school in favor of a full-time job. His Dad doesn’t agree and lectures his son about the importance of a good education. Public domain, photo published without copyright notice.