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This Is Why Stocks Fell and It Wasn't Trade or Yield Worries

This Is Why Stocks Fell and It Wasn’t Trade or Yield Worries

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me. Otherwise, enjoy the column!

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12:04 PM on 12/04

What was that about it? I most certainly never saw that coming. It was a relatively typical day for the most part until 12:04 PM than something changed materially. That was when the S&P 500 fell and just kept falling.  Which is strange because today’s date is 12/04. Bizarre.

An Event?

So I want to know what happened at 12:04 today? The charts tell you an “event” occurred at 12:04 today, or precisely around that time, that caused the market to go from an ordinary tame sell-off to something steeper and more severe.

I can tell you what I think it is not from, the trade truce confusion or the yield curve inversion. Why? Because most of the trade truce confusion was out this morning regarding Wilbur Ross and Larry Kudlow. Well before 12:04.

The yield curve started selling off yesterday and has fallen for weeks now.   Banks were trading sharply lower to start the day.

It’s Back!

But you know what happened around noon today?

The Drop

You can it here in the S&P 500.

spx

That was also the moment that the NASAQ fell below support at 7,348

ixic

The Russell

russell

Technology XLK

xlk

But interestingly the movements weren’t just in the equity market. No, they were in the currency market.

Interestingly the dollar index spiked at 11:58.

dollar

The Euro

euro

And of course, the Pound! The Pound, yes, the Pound. When the results of the UK parliament were known not to back May’s Brexit plan and is an indication things may not go smoothly when the vote comes on December 11.

pound

 


If we explore the sell-off a bit further, we notice that yields on the 10-year also started to fall sharply around that same too.

yields

It was also at 12:04 that the Mini S&P 500 futures saw a rather large spike in volume.

mini

Amazon saw a similar spike at 12:04 too.

amazon, amzn

Brexit Hangs in The Balance

The Brexit vote likely resulted in a rush into safety in our bond’s sending yields lower. Remember the European market were all closed at this point in the day. So, if you are in Europe and now there is once again Brexit uncertainty, you will want to seek safety. Every event I believe that took place the rest of the day was a result of this news. Even worse, US markets are closed to tomorrow, there will be no where to run for cover.

In fact, it looks as if there was a large sell-program that hit the market that point in the day.

There is no denying that at 12:04 PM there was a noticeable shift in the marketplace, the kind that happens when their news.  I don’t think you have to be a rocket scientist to have known that the “truce” had a lot of holes in it, and was merely the start of a conversation.

The good news is that the US stock market is closed tomorrow, and Europe is open. So, we will see what happens over in Europe.

Who knows maybe I’m an idiot and I’m totally wrong. But those are my thoughts.

Back tomorrow.

Photo Credit Via Flickr

Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results

Brexit, stock market, sell-off, stocks

 

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