When Is Enough Enough?

When Is Enough Enough?

The past three sessions the U.S. stock market has followed China's lead, plunging -8.96% in that short time. With the Shanghai Composite down another -7.6% overnight (now -15.5% this week), at quick glance it seems like we're in for another rocky session.

However, futures indicate a big rebound at the open stateside. Dow futures are up +543 points, while S&P 500 futures are up +64.75 points. European markets are rallying sharply, with Germany up +4.40% and France up +4.54%.

Oversold conditions and signs of capitulation continue to garner a lot of attention in China, and market contagion is a growing concern.

So, what gives? With China posting another abysmal session, and the situation seemingly getting worse by the day, why are markets elsewhere poised for a big rebound this morning?

First off, the big news. China cut interest rates for the fifth time in nine months on Tuesday in an effort to shore up slowing economic growth. The central bank said the benchmark 1-yr rate would be cut by 0.25% to 4.6%, among other slight adjustments. While this was a move that was mostly expected, it has given the situation in China a "band-aid" of sorts this morning, though many financial experts are not convinced that the move will save China's plummeting prices.

The other news this morning is from U.S. firms regarding the state of the economy here in the U.S. Goldman Sachs said it expects the U.S. economy will avoid contagion and continue to expand, and that the S&P 500 will rise 11% to 2,100 by the end of 2015. It also said that this type of rebound would echo the trading pattern exhibited in 1998, when U.S. equities rallied and largely ignored the Asian financial crisis.

JPMorgan was a bit less bold, ...

Read More
Comments

Is "The Big One" Upon Us?

For the umpteenth time in the last five years, the stock market is scaring the bajeebers out of investors. "This is it," seemed to be the battle cry last week as the bears (aka the Goldman Sachs, Virtu, Getco and ...

Read More
Comments

The Worst Day of the Year

The Worst Day of the Year

It felt like it had been coming for quite some time, but yesterday's selling spree was still surprising given the sheer severity of declines across major indices despite the lack of an "event," so ...

Read More
Comments

China Remains the Focus

China Remains the Focus

Stocks finished significantly lower yesterday following a weak tone in global equities, despite some positive action late in day following the FOMC minutes. China has been the primary driver of the market action lately, and on ...

Read More
Comments

Let's Review Part II - Is There Value In Them Thar Hills?

This morning, we'll continue our look at the market through the three primary time-frame lenses. Yesterday, we reviewed the action and the drivers from the short- and intermediate-term view. Today, we will focus on the bigger picture. So, without further ...

Read More
Comments

Let's Review - Part I

As I have mentioned previously, in March of this year, I accepted the position of Chief Investment Officer at Sowell Management Services, an investment management firm responsible for north of $500 million of client assets. One of my jobs ...

Read More
Comments

Can You Say Neutral?

Welcome to the consolidation phase - are we having fun yet?

From a longer-term perspective, all we hear from the market analysts these days is that the volatility of the market has dried up this year. There have been no ...

Read More
Comments

Rebound in Oil Patch Saves The Day - But Can It Last?

Ho hum. The S&P 500 finished Wednesday's session with a gain of 1.98 points or 0.10% and the illustrious DJIA closed down 0.33 points, which, of course, amounts to 0.00% on the day. It must be late summer, right?

Well, ...

Read More
Comments

Recovery, What Recovery?

After being down five of the last six sessions and ten of the last fourteen, stocks blasted higher on Monday. The popular media attributed the unexpected joyride to the upside, which turned out to be the Dow and S&P's best ...

Read More
Comments

Divergent Behavior

We've talked a lot recently about the protracted period of time the stock market has spent moving sideways. To be sure, the current action feels a bit off. And now there is some data to back up this view. As ...

Read More
Comments

Building An Unemotional Market Model

Last time, we looked at the "Indicator Wall" a team of professional money managers I am involved with built for NAAIM - The National Association of Active Investment Managers. The idea was to provide NAAIM members with a complete rundown ...

Read More
Comments

A Cold, Hard Look At The State of the Indicators

I have been suggesting for some time now in my oftentimes meandering morning market missives that the risk of a meaningful correction in the stock market has become elevated. I've relayed many of the reasons why I come to this ...

Read More
Comments