Aside from the positive housing data and the bad news about Bank of America, the world is still as it was on Friday when the market closed down sharply. Russia and the world are still warily dancing over Ukraine, Malaysia is still looking for its lost plane, and the market is still bouncing up and down, as it has for some weeks now.
- Equities have been sawtoothing as the S&P 500 has alternated between higher and lower weekly closes for 8 consecutive weeks
Once one gets past the awkward use of a noun as a verb above (sawtoothing?), the reality hits home – the market is unstable. It appears it has yet to find its level. The market is out of balance and it is struggling to get in balance.
- Phil Pearlman makes the argument that stocks are doing what they can to frustrate the largest possible group of investors.
Personifying stocks does little to help mitigate the reality. Stocks don’t do; they are. They too are a noun not a verb. Yet, it is true that the market is frustrating its participants, at least this participant. Aside from Ukraine, which seems to be a nonstory at this point – two countries yelling at each other with guns in hand – not much has appreciably changed in either the economic fundamentals or market fundamentals since this volatility began some weeks back.
- At times, markets frustrate the majority of participants and this environment is precisely such a time.
The above is a more accurate use of language to describe the market and its effect on those who participate, but even if the language improves, the market is still the market and what it does day to day these days is not based on fundamentals of any kind. The behavior is both manic and depressed.
- Pfizer’s (PFE) making a roughly $100 billion bid for AstraZeneca (AZN), highlighting the escalation in mergers and acquisition activity. Standing in contrast to that increasingly isolated bullish premise is the 1.6% drop in the Shanghai Composite, adding to a 2.9% drop last week.
Yes, the global market is not behaving rationally, given the global fundamentals. True, China is flailing a bit with its mere 7.5% growth rate, but when one puts that in context with both its largest trading partners experiencing forward economic movement, it is hard to see that 6-9 months down the road, the world is not a better economic environment.
It is Monday, after all, and that means some sluggishness in general. I feel it and maybe the market is feeling it as well, even if it jumped out of bed this morning to get into the green. I say this because as I write, the highs of the day are slipping away. The Dow is now down some 75 points below its high, which puts it right around 65. It appears to losing ground quickly and I have not a clue as to why.
Nevertheless, I would not be surprised to see the market fight its way back before the day is over. The bulls and the bears are fighting to find their peace. Contradictory I know, but true nonetheless. And the fighting goes on, which means our job is to watch closely but stay out of the firing range. Be careful out there.
Trade in the day; Invest in your life …
