Wednesday was a great session, but the closing swoon served as a reminder of how edgy the market will be for the next few weeks to the news of “attacks,” on Iraq. Of course, there will be skirmishes and the same kind of mischief that has been endemic to the region for a couple of decades. However, it turns out a couple of Katyusha missiles were launched and sparked a fire. These cheaper and far fewer effective missiles that date back to WWII are used mostly as a weapon of terror.
The market moves on headlines that don’t bother to investigate details that might engender the increased volatility for a while. Investors have been conditioned for this after almost two years of false and misleading headlines on the trade battle with China. Keep your eyes on fundamentals. With that in mind, the market breadth underscores the fact that pullbacks will be more frequent and swifter. The down volume was almost equal to the up volume, as some investors are looking for an excuse to take the money and run.
The NYSE and the NASDAQ Composite combined:
- Advancers: 3,667
- Decliners: 2,504
- New Highs: 425
- New Lows: 30
- Up Volume: 3.16 billion
- Down Volume: 2.76 billion
Island of Misfit Stocks
The biggest percentage gainer among the S&P 500 was Constellation Brands (STZ) +3.6%, but there were some gangbuster moves in stocks that don’t qualify for the S&P.
GrubHub (GRUB) and SmileDirectClub (SDC) are two well-known names and well known in the market for busting higher on speculation and news. I suspect investors will continue to sift among the rubble of broken initial public offerings (IPOs) and perhaps visit the Island of Misfit Stocks for opportunities.
There will be winners but not without a heightened risk.
After the close, Bed Bath & Beyond (BBBY) posted a revenue of $2.76 billion, a loss of $0.38 a share against the consensus of $2.85 billion, and $0.02 earnings. Management withdrew guidance, which sent shares into a spiral. The good news is the dividend is still intact, and perhaps the company will become a more attractive target to the PE (private equity) crowd.
It was a great session, not just because we saw stock market resolve, but because we saw American resolve
Portfolio Approach
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Initial Jobless Claims
The Bears have been growling about the sharp rise in initial jobless claims, but the December 8 spike is fading fast.
In the week ending January 4, the advance figure for seasonally adjusted initial claims was 214,000, a decrease of 9,000 from the previous week's revised level of 223,000.
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