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Morning Commentary

Markets Closed Today

By Charles Payne, CEO & Principal Analyst
12/5/2018 10:53 AM
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Today, America Recognizes and Celebrates the Life of President George H.W. Bush, our 41 President.  

The biggest culprits in yesterday’s selloff had nothing to do with fundamentals, which is important to consider as these wild gyrations are likely to continue for some time.

I should note that the numbers are bigger because market indices are near all-time high levels, so for instance, 100-point swings in the Dow Jones Industrial Average don’t send the same message they used to send.

There are several factors behind yesterday’s trading action that must be reviewed. 

Non-Fundamental Reasons for Selling

A piece in Zero Hedge, points out a massive sell program, with notional value of close to $33.00 billion, kicked in right as the S&P 500 was crossing beneath its 200-day moving average.  The chart below reflects the fact the bottom fell out with selling across the board. 

There is no doubt programs and algorithms have taken an increasingly larger role in day-to-day market action.  They create panic-like conditions on the upside and downside, often exacerbating reactions to news and speculation.   Moreover, they can be manipulated, which is why long-term investors must understand underlying facts and fundamentals before following the machines down rabbit holes.

 

Message of the Market

No sector when unscathed except for safe haven utilities

  S&P 500 Index

-3.24%

  Communication Services (XLC)

-2.95%

  Consumer Discretionary (XLY)

-3.60%

  Consumer Staples (XLP)

-1.63%

   Energy (XLE)

-2.81%

   Financials (XLF)

-4.35%

   Health Care (XLV)

-2.23%

   Industrials (XLI)

-4.25%

   Materials (XLB)

-2.97%

   Real Estate (XLRE)

-1.32%

  Technology (XLK)

-3.79%

  Utilities (XLU)

+0.07%

Financials continue to confound, since big banks are supposed to benefit from higher rates and market volatility, while smaller regional banks were supposed to rise with the fortunes of Middle America. Neither is happening.

Yesterday, there was concern out of the Goldman Sachs conference, of peak consumer credit, to go along with all the other potential “peaks”, from business revenue growth, margin expansion and earnings.

Watch the Beans

With the market closed its hard to get a read on things, but there has been very positive comments coming out of China that dovetail with the Trump administration.  They acknowledged the 90-days and said they are ready to buy LNG and soybeans again.

Soybeans are breaking out through big resistance point @ $9.05, keep an eye on trading in them today.

WSS salutes President George H.W. Bush


Comments
Great summary of market events, Charles, you captured the essence of what happened yesterday. I've often wondered what effect the anti-Trump people have on the market.

John on 12/5/2018 11:22:54 AM
I think the comments from China will result in a big rebound tomorrow and a reduction in volatility for the foreseeable future. If this doesnít happen, maybe the trade tensions with China really hasnít had much of a role in recent market losses.

Miles Russell on 12/5/2018 11:39:11 AM
Charles, words or wisdom, &FACTS as FBN IS one of the ONLY SOURCE MATERIAL FOR INVESTMENT PURPOSES PEOPLE CAN BELIEVE IN. YES WE Honor and will miss George H.W. Bush, & Still believe Ross Perot was paid to divide REPUBLICAN VOTERS to let Slippery willy Clinton win &take credit f pi r ALL TH HE ECONOMIC GROWTH REGAN & BUSH H.W. , signed and put into action, unfortunately it took time, and the slippery willy Clinton took ALL THE CREDIT FOR ECONOMIC GROWTH..BUT I ,WE & MANY MANY OTHER VETERANS, USA LEGAL TAXPAYER CITIZENS ALL THANK GEORGE H.W. BUSH FIR THE GREATEST THING A.D.A. AMERICANS with DISABILITIES ACT. It was & is the thing that gave us wounded, injured, suffering from illness & diseases a legal requirement for protecting our Rights.

Ed on 12/5/2018 1:20:58 PM
Charles, FBN, WE THANK YOU ALL FOR COVERING GEORGE H.W BUSH FUNERAL WITH THE SAME COMMON COURTESY &PRESIDENTIAL PRIDE THE USA, USED TO HAVE, BEFORE SLIPPERY WILLY CLINTON &HRC, & B.O. socialist Democrats tribalism &racism SJW&PC DESTROYED our USA HISTORY as sense of PRIDE in THEMSELVES and USA. As for the bots, programmers caused stoploss cascading selling. Just so mrkts lije CHINA, &OTHERS COULD BUY FIRESALE PULLBACKS ON USA STOCKS. Do you find it convenient that CHINA ( Albeit NEVER admit to loss or giving in) havent told their Chinese people they have Agreed to the DEALS USA has already POSTED in news, TV, and txt, tweeting, etc?. Knowing the ANTI TRUMP medias, cnn,nbc,Bloomberg, abc,msnbc,n.y.time,n.y.compost,etc all will say President Trump LIED about the FACTS, and agreements. So huge selloff ACURES, and USA MRKTS CLOSED WED FOR George H.W Bush FUNERAL, the Chinese mrkts &others can scoop up firesales and bots caused SEVERE OVERSOLD PRICES IN ALL MARKETS. Do you agree or disagree Charles PAYNE? Thank you for always telling us the FACTS based on TRUTH, please reply or talk about on your show TODAY or tmrw. You Charles PAYNE deserve a RAISE WITH A LARGE EXSPENCE ACCOUNT. Tell us whom to call, and ALL OUR VETERANS & followers will flood FBN IN ALL MEDIA, &PHONE ACCESSIBLE WAYS. Thank you Charles PAYNE & FBN . Thank you president Trump. George H.W Bush we thank you for everything you did, especially A.D.A. FOR ALL LEGAL USA TAX PAYING CITIZENS.

J on 12/5/2018 1:46:06 PM
I'm a retired investor that is striving to be well allocated for the long run. I don't have the tools to be as agile as I would like, but Making Money is an important aid in keeping the markets in some reasonable perspective. I like ostriches, but will not run like them in a panic.

Mitch on 12/5/2018 3:44:49 PM
 

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