700+ points of Dow decline on Thursday surely did change sentiment quickly. And while stock market bottoms do occur on Fridays (13% of the time), contrary to popular belief, the final low is unlikely to be today. Earlier this week, I discussed how all three of my offered scenarios were breaking down as they all eventually do, I thought the Dow would go check out 24,200 but likely head all the way down towards 23,000 which is below the lows from February. However, I do not believe the other major indices will all exceed their February lows, which creates a non confirmation or divergence.
Sector-wise, semis and banks look the healthiest of the four key ones with transports and discretionary trying to hang on. I am most concerned about the consumer. Defensive stocks have been battered and bludgeoned as much as cyclical ones. And bonds aren’t really offering that safe haven.
As I mentioned on Fox Business yesterday and something I will be writing about for the next two plus years, tariffs are awful economically. No one wins in a trade war. The Fed is raising rates AND selling assets at the same time as the Treasury needs to borrow more money. This is not a good combination and will end poorly if not changed.
Before you out and buy bottled water and canned goods, I still forecast fresh all-time highs in the Dow coming by summer. Sure, I could always be wrong, but the evidence doesn’t support recession and a bear market just yet. That time will come.
Remember when the only talk was about a stock market melt up?!?!
