Daily Market Update – September 29,  2015  (Close)

 

If you are a fan of disappointment, your joy of yesterday wasn’t getting any less this morning.

Yesterday’s 300+ point loss didn’t have much of a basis for it, but it was amusing to hear so many talk about how the market was expressing a fear of an upcoming interest rate hike.

It really makes you wonder whether there is a collective deficit in short term memory or maybe those with airtime believe that the audience is either not listening or they are the ones suffering from short term memory issues.

This morning’s feeble attempt at a bounce back from yesterday’s large loss grew even more feeble as the pre-futures were edging closer to the opening bell and they weren’t offering too much encouragement. The day, as it would turn out, did nothing to make you believe that anything would get better tomorrow or the next day.

The decline yesterday took the S&P 500 well below the 10% correction level and once again people are looking at charts to give their predictions of where the market may go next if continuing to test support. Today’s gain did nothing to make things better, other than sneak 0.1% closer to not being in correction.

With the S&P 500 now sitting at 1881 to start the morning, it looks as if there is some support at about 1865 and then again not until 1820. From there, the next real stop is at about 1750.

That 1750 level would not quite represent the 20% decline level which is what is standardly seen in a bear correction.

Putting that in DJIA terms, which my mind still reverts to, those represent levels that are about 110, 480 and 1050 points lower.

WIth a couple of purchases yesterday, I thought that I’d be inclined to just sit and watch today and even if more “bargains” appeared to be popping up. Tomorrow may be no different and it may be a good idea to see just where the market can and will find support. Sometimes you just want to see some proof or some validation before you continue to stick your neck out even more.

Sticking the neck out, however, hasn’t been a very risky thing to do, but the moves have been so sudden on almost everything these days that victory is quickly snatched away. Fortunately, though, it is a little easier to find some rollover opportunities, maybe using longer term options, as long as the decline isn’t too swift and too drastic.

That, however, has definitely not been a given in any sense of the word as many stocks have exhibited some really large moves in the absence of any news.

Of course, as is usually the case, although we won’t see verification until earnings start pouring in, the level of corporate buyback activity has probably fallen as prices have.

That’ the typical perverse nature of things. 

While you and I are more apt to want to buy something when it looks value priced, corporate buyback programs are notorious for being indifferent to price and usually buying shares when they are moving strongly higher.

It doesn’t really matter when it’s other people’s money and your bonus is in part predicated on share performance. Why spend free cash to buy shares to prop up price and create support when it still leaves shares at a net loss and of no value to your bonus situation?

So even with all of that corporate cash still sitting around and set aside for buybacks, there’s much less left because so much was used at much higher levels and there’s no real incentive to use much of it now. Instead, those CEOs will likely wait for a market rebound and start buying again when it appears as if their activity may help to push shares above a certain threshold level that puts more bonus dollars in their own pockets.

What a system. You have to love it.

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