Archives For December 2018

December has been turbulent for the market. Declines like we have recently witnessed are beyond usual as shown in the graph below. If this in fact is the beginning of a new bear market, we’re off to a rip-roaring start.

  • As of Tuesday, 10 of 14 market days in December were down days for the Dow, which isn’t a first – but seven of those ten were down -350 points or more.  Here’s a listing – from best to worst days.  (Source: Yahoo! Finance.)
    • 157.03 (12/12)
    • 82.66 (12/18)
    • 70.11 (12/13)
    • 34.31 (12/10)
    • -53.02 (12/11)
    • -79.40 (12/6)     
    • -351.98 (12/19)
    • -414.23 (12/21)
    • -464.06 (12/20)
    • -496.87 (12/14)
    • -507.53 (12/17)
    • -558.72 (12/7)
    • -653.17 (12/24) -799.36 (12/4)

Stocks & Government Shutdowns

December 28, 2018

Since September, the market is on a roller coaster and many wonder what role the government shutdown is having in all of this. The chart below is an interesting study of previous shutdowns, and as you can see, they have not had a big or consistent negative effect on the market.

Biggest Bears

December 26, 2018

Especially after suffering their worst week since 2008, pretty much everyone knows that stocks are struggling of late.  But with each of the major indexes falling into bear market territory, many are probably unaware of just how swiftly and severely individual stocks have been hit.  Many of Wall Street’s recent favorites are down a ton, with the popular “FAANG” stocks (Facebook, Amazon, Apple, Netflix, and Google) down anywhere from 20% to 40%.  Research firm FactSet created the following graphic, showing just how bad the carnage has been – and keep in mind that the losses are through the 20th, and don’t include the further damage done on Friday the 21st:

The Death Cross

December 9, 2018

As the major market indexes have fallen of late, one after another has experienced what’s known as a “Death Cross”, a technical market pattern that occurs when an index’s 50-day moving average crosses below its 200-day moving average.  Its dreadful name would suggest that every investor in the world should run for the hills whenever one occurs—but is that the prudent thing to do?  Mark Hulbert, financial columnist at Marketwatch, decided to take a look.  Going back to 1970, Hulbert found that the Dow Jones Industrial Average has endured 34 “Death Crosses”, followed eventually by the opposite, the so-called “Golden Cross” when the 50-day moving average crosses back above the 200-day moving average.  His study showed that on average, the market has actually performed somewhat better following Death Crosses than it has following Golden Crosses over the following month, quarter and 6 month periods!  As he notes, this is exactly the opposite of what market folklore would lead us to believe.

Disclaimer: The information in this post is not a recommendation to buy or sell securities. Investment decisions should not be made upon a single chart or graph. You should consult a qualified investment advisor before making an investment decision.