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Daily Market Update – September 24, 2014 (Close) Yesterday was just another really awful day. It wasn’t quite as awful as the pattern seen in the previous week when the broader market wasn’t as robust as the DJIA, however, as the S&P 500 fared slightly better, yesterday. Not well, just slightly better. Put two awful days together after having reached another market top and you have about a 1.2% decline from that top. That’s not very much, but it does get people who haven’t known real hardship for the last two years a little bit nervous. Every one tries to look for a marker that indicates that the tide has turned and many have seen the Alibaba IPO as that landmark event, as if it was some sort of albatross around the market’s neck. While in hindsight in may appear to be that way, it’s pretty laughable seeing the attempts to portray single IPO events of the past as somehow being the marker of large market declines, as best can be said is that there is a coincidence, based upon less than a handful of observations. Where there is more than a handful of observations is looking at the longer term chart for the S&P 500 chart for the past two years and you can see this pattern of ebb and tide that has been occurring every two months or so, the last of which was in July, when we went down about 5% in two weeks and then just as quickly went even higher, as August saw each and every week end higher than the previous one. Different time periods have different characteristics. Certainly the 2007-2009 time frame wouldn’t likely show a similar pattern, but there are markets within markets, much as you hear debate about whether we are currently in a bull market that’s part of a secular bear market or whether 2007-2008’s decline was a bear market in a secular bull. No one knows, because there are no real definitions and the time frames can be conveniently shifted to fulfill whatever goal you have in support of your contention. Ultimately, the last two years don’t matter, as it’s only the future that now has any real meaning. Based on the past two years every time we have seen some kind of a retracement and some mild increase in volatility, the real only question has been whether the decline will be mild and limiting. Knowing that is helpful if looking toward the future, as we all should be doing. In hindsight, the answer every time that question has been asked has been the same, but each new assault rightly raises the question anew, because every rational person knows that history demands that there be a period of reversal, whether it’s a reversal from 2007 or a reversal from 2009. It’s far better to be ahead of that curve than behind it. Today appeared as if there might be a little bit of a break from the past couple of days of broad selling and as as usually the case that kind of activity is welcome going into the end of the week. Usually weakness is a great way to begin the week, unless there are some concerns about how prolonged that weakness may be, as was the case this Monday. However, coming off weakness it’s often comforting to see some price appreciation when starting to think about assignments and rollovers, especially when there’s an added hope of being able to replenish at least some of the cash that was expended during the week. That would get us ahead of that curve, regardless of what direction it travels. As with most curves, it’s usually best to slow down and take in all of the information that’s available. That sounds like a good plan for the rest of the week as today’s market gain erased about 70% of the previous two day’s worth of losses and at least for a day put to bed all of those running around pointing out the dreaded “Iron Cross,” that was yet another of those unvalidated technical indicators that sometimes tells you what is going to happen and other times tells you what isn’t going to happen, but doesn’t really tell you which of the two outcomes it will predict. So with now two more days left for the week we’ll just have to guess which market will return tomorrow and whether that market will also be back on Friday, as so far this has been a week with no real catalysts and no real reasons for much of anything. Those are hard to get ahead of as they are more like blind curves and even traveling at slow speed may be tricky.
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