Is The Stock Market Schizophrenic or Bi-Polar?
Yesterday, in a piece called “Stock Market Schizophrenia” (https://markonomics101.com/2018/10/01/stock-market-schizophrenia-markonomics101/), we looked at how the markets are becoming very fractured, (between sectors).
Interest rate sensitive sectors such as REAL ESTATE, Broker-Dealers, and Banks were all at, or near, LOWS. At the same time, the Technology and Health Care sectors were at, or near, HIGHS.
Stock Market Index Schizophrenia.
In Monday’s trading, the major equity INDEXES themselves were all heading in different directions, at the same time, (i.e., disorganized behavior). Keep in mind, these first four charts, are all “intra-day” and only show the changes for October 1, 2018. The Dow Jones Industrial Average (DOW) rose nearly 200 points while other indexes were either slightly changed or even DOWN.
Despite the apparent strength in the Dow, the Nasdaq Composite closed DOWN as did the Russell 2000 (RUT). For comparison, we included the Wilshire 5000 (WLSR), the broadest measure of equities, which gapped higher at the opening bell, but then nearly gave up the entire gain. Some background on the index can be found here (https://wilshire.com/Portals/0/analytics/indexes/fact-sheets/wilshire-5000-fact-sheet.pdf). It is commonly used as an equity benchmark since it includes everything but the kitchen sink.
Other stock market indexes were all over the place. Standard & Poor’s, in addition to its 500 Large Capitalization Index, also has indexes for MidCap 400 (MID) companies and SmallCap 600 (SML) companies. The venerable S & P 500 was up 10 points (+0.33%), but MID was DOWN 0.76% and SML was DOWN 1.44%. (This is almost “bi-polar” with two extremes within the same sector.)
Are you confused yet? That’s EXACTLY what Mr. Market wants.
Commodities Surge. Are Now Screaming “Inflation”!!
Two weeks ago, solid signs of Inflation were nowhere to be found (https://markonomics101.com/2018/09/16/inflection-point-part-6-what-precious-metals/). Not now. The benchmark for Oil, West Texas Intermediate Crude (WTIC), and the Goldman, Sachs Commodity Index (GSG) have suddenly surged to new highs. But, if you’re a large consumer of oil, or its refined products like an airline, your outlook just got much worse. The Airlines Index (XAL) was DOWN more than 3% today.
The incredible disparities among various sectors and in various indexes is NOT a sign of a healthy market. “Take Your Money Off The Table, Before The Table Takes Your Money Off You”. This is an Ultra-High Risk and tricky market (https://markonomics101.com/2018/09/22/mr-market-and-ultra-high-risk-for-equities/).
Here at Markonomics101, there really is no inflation. We’re free.
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