What a difference a day makes! In Friday morning’s market missive entitled “Is It Time To Worry?” the argument was made that the chart of the DJIA (NYSE: DIA) was not representative of the state of the overall market. While the venerable Dow was looking sick, the point was the rest of the major indices were “just fine, thank you.” Thus, it was suggested that investors “listen” the message from the broader market, which appeared, at the time, to be fairly upbeat
Whether it was a case of algos gone wild, buyers standing aside in front of potential “headline risk” over the weekend, or fears that a new crisis/contagion was developing, the bottom line is the “everything is fine” message that appeared to emanate from the major market indices turned out to be flat out wrong.
The DJIA had a horrible day Friday, losing 318 points and experiencing its first back-to-back declines of more than 1 percent since April 2012. The S&P 500 (NYSE: SPY) got slammed for a loss of more than 2 percent (2.09 percent to be exact), which was the worst day since June and the league-leading Midcaps (NYSE: MDY) and Small caps (NYSE: IWM) were smoked for losses of more than 2.5 percent. Ouch.
So, to answer the question posed in Friday’s column, “Yes, Virginia, it does appear that it is time to worry again.”
What’s This All About?
Before we embark on a stock-chart review redo, it would appear that there is some confusion as to why stocks got hammered on Friday. So, let’s see if we can make some sense of things here.
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.