Daily Market Update – October 15, 2014 (Close)

Despite yesterday’s decent closing action and despite somewhat positive results from Intel, the market is back to its recent ways and is headed sharply lower this morning.

What those futures didn’t foretell is what a wild ride today would turn out to be.

It has probably been 5 years or more that I’ve entered a week and got to a Wednesday not having made any trades. Today didn’t look as if it was going to offer any change from that path as there was still no reason to believe that a floor was being made.

In response to some questions today, this didn’t have the feeling of a capitulation even as we were at the depths approaching a 500 point drop, because it was still fairly orderly and you didn’t see rapidly changing declining numbers.

There were really a fair number of credible attempts to claw back through the day.

While yesterday’s strength looked promising and while the market did at least finish in the positive, it wasn’t the kind of day that offered good news or any opportunities.

Instead, all it did was to not offer any bad news. Today was a bad news day, but it really didn’t offer bad news for tomorrow.

But why is all of this happening now? What caused us to get to about a 9% drop on an intra-day basis?

With oil going sharply lower, there are concerns that it may be demand driven, just as much as from increasing supply. Everything we thought to be true is sudden;y not the case. Interest rates aren’t going higher and lower oil prices are not fueling anything that would otherwise grow an economy.

With continuing uncertainty in the world, now fueled by Ebola, rather than geo-political concerns, there are worries of a SARS like impact on global economies and stock markets that have to be quelled before markets can return to business as usual.

With the market down about 6.8% from its high as it was getting ready to start this morning looked as if it would take it that much closer to the 10% figure that represents the correction that we’ve been waiting for and have done so for more than 2 years, so the ensuing trading didn’t really disappoint in that regard.

It’s just not clear where anything stops or what causes it to stop.

But just as the 200 dma may have been a catalysts for some program selling at the 1905 level, so too may technical factors play a role in any buying as support points always get people’s attention.

The next level of support seems to be at about 1816 on the S&P 500 and we definitely showed an ability to bounce as we started approaching that level, which coincidentally is 10% below the rec
ord high.

I imagined that today would just be a continuation of the beginning of the week, as there was little anticipation of doing anything other than to watch and wait for an end to uncertainty and for some brave souls to make a statement that prices have just gotten too low.

Unfortunately, today was the third successive day in being unable to even get DOH trades made, although I didn’t put in any new ones today, having failed at attempts to get trades on CHK, HAL,JOY, LVS and TMUS done on Monday and Tuesday during the market’s uptrend periods.

For the remainder of the week there’s still lots of earnings news that could conceivably lead the way, but the Intel news was already unable to do so, although its results do suggest that certain key components of the economy are better than we may have believed.

For now, it’s just a battle between uncertainty and the fear it creates and the confidence that economic growth is occurring as we wait for calmer heads to prevail.