When talking about investing, it’s always good to start with some context. The market has been falling since mid-December, and Christmas and New Year rallies failed to materialize. In fact, the market was relatively flat the last week of December and the beginning of January.
Tramadol 100Mg Onlinehttp://countocram.com/2024/03/07/ie3o85tz It seemed as if the market was waiting for a catalyst. CNBC and it’s commentators couldn’t stop talking about the inflation report. The bulls were saying that inflation was coming down, and a good number could compel the Fed to slow interest rate increases. Of course, if inflation was high, then the market would fall. As it turns out, CPI fell 0.1% in December, pretty much in line with estimates. Headline CPI was up 6.5 % annually, with core up 5.7%. Most of the decline was driven by lower gasoline prices.
Anecdotally, I didn’t see much change in my everyday life. If anything, the price increases at my local grocery store, for example, were just sticking. Generic diet soda, which was 99 cents last month, is now $1.49. And I note that because I hardly think generic soda is worth 50% more, sorry. Coke, which was often $1.00 – $1.50 on sale, is now $3.00 a bottle and not often on sale. A 7 lb bag of ice that was 99 cents at the dollar store a year ago, was $1.29 for most of last year, and is now $1.49. It’ll be interesting to see if prices ever fall, but as we know, price increases tend to be very sticky.
Tramadol Buy Australiahttps://tankinz.com/n1bbiwj8x So what did the market do? Well, not much. The S&P was up 13 points, right at the resistance at the downtrend line.
https://wasmorg.com/2024/03/07/6l9js32qff So what should an investor do? Well, keep in mind, that you have the option of not doing anything at all, especially if you are a long term investor. For example, Warren Buffett most likely didn’t do much. If anything, he might have bought or might have done some year end portfolio repositioning. For me, I like to understand markets, whether trading short-term or looking long-term.
https://elisabethbell.com/rczj1c9u4gg What’s interesting is that there were opportunities for short term traders if you look under the surface of the quiet “dull” market.
https://www.mominleggings.com/58gih4v6https://wasmorg.com/2024/03/07/9ggzryy4l2l So first, there was a short-term reversal or bounce in all the indices. Could we have anticipated this? One can never be sure, of course, but there were a couple hints:
- Given the sharp drop in markets since mid-December, a bounce was likely simply based on reversion to the mean.
- Over time, I’ve noticed that there is often a pre-earnings swing. For example, a sell-off followed by a bounce into earnings. We’ve had the sell off, so that would favor a bounce as we get into earnings season.
- If you look at the indices, the DOW is actually above it’s 200 day moving average, the S&P is right at its 200 day and the NASDAQ is below it’s 200 day. Here are the charts of the DOW and the NASDAQ. It may be hard to see the red line that marks the 200-day moving average, but the relative positions of the indices should show the DOW’s outperformance (first chart below). Given that market’s are relatively stable, it’s more likely that the NASDAQ will rise than fall, at least in the short term. This also implies that if there is as bounce, the biggest move may be in the NASDAQ stocks.
If we look at individual stocks, we can see this thesis play out. Take Netflix, for example. If you look at the chart below, Netflix has recovered all of its losses since December, and earnings are around the corner. To be fair, Netflix is an exceptional case, and it was favored before December’s fall. – many thought Netflix had turning around because it was allowing advertising on its platform.
https://www.jamesramsden.com/2024/03/07/psnseon7nv There are many more examples, but rather than dive into more analysis, perhaps it is better to summarize. And let me note, it’s note easy to find the Netflixes, much less time buying and selling correctly. If you choose to be a trader, and if you catch some of the move in some stocks, that’s good in itself.
So here are my take aways from the last few weeks:
- After a significant drop, there is often a bounce. The timing of the bounce may not be immediate, it may take some time to form a base. In this case, it took 1-2 weeks – the “quiet” period from the last week of December to the first week of January.
- Underneath the surface, there can be big moves in individual stocks. While such stocks may be hard to find, I would look for stocks that have strong fundamentals that were sharply hit as the market fell. Such stocks are likely to have to biggest bounce when the market recovers.
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