If the stock market action thus far in 2014 has made you a little uneasy, you are not alone.
If you find yourself wanting to beat your head against the door, don’t fret, you’ve got company. And if you are spending an inordinate amount of time yelling at your screens, don’t despair – the guy next to you is probably doing the exact same thing.
Sandwiched in between the Jan/Feb’s -5.76 percent decline in the S&P 500 and the more recent thrashing of the momentum stocks (which produced a decline of -8.22 percent in the NASDAQ and -8.07 percent on the Russell 2000), has been a great deal of frustrating, range-bound, sideways movement this year.
In fact, of the 16 weeks that will have been completed in 2014 when the closing bell rings today, at least 10 have been largely east-west affairs. But mind you, these are not simply sideways markets. No, this is sideways with a dash of volatility mixed in – so as to drive everyone completely batty!
The overly simplistic chart of the S&P 500 below makes the point quite clear.
2013 Gains Being Digested
Some analysts suggest that the strong move up in 2013 wound up “pulling forward” some gains that rightfully belonged to the current calendar year. The thinking iss that with everyone looking to better days ahead – especially near the end of last year – the buying simply got out of hand. As a consequence, the action in 2014 can be considered a digestion or consolidation phase.
Ok, that certainly makes some sense. Then when one considers that we’ve already been exposed to at least two possible “crises” (the emerging market currency crisis and the Russia/Ukraine geopolitical crisis) and a rather severe correction in the mo-mo names, well, it’s a wonder that the S&P 500 isn’t in the tank at this stage of the game.
Haven’t We Seen This Movie Before?
Many analysts (including yours truly) have expressed a nagging feeling that we’ve seen this movie before. And unfortunately, the ending, while not horrific, wasn’t much fun to watch.
David Moenning is the founder and chief investment strategist for StateoftheMarkets.com, a website dedicated to investor education and portfolio analysis. Mr. Moenning is also President of Heritage Capital Management, a privately owned, investment management firm. Founded in 1989, Heritage is focuses on risk management and an “own the best and ignore the rest” equity selection strategy.
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Positions in stocks mentioned: none
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.