I Have Not Witnessed Such a Myopic Destruction During My 30 Years in the Industry.

The Russell 2000 surged 1.8% yesterday on the strength of commodity companies, more specifically the energy issues that rose 6.1%. Unless one has been living in a cave, all commodity companies have been crushed, decimation that has not spared the debt.   Bloomberg writes the Russell 2000 oil companies plunged 7.2% on Monday.  Personally I have not witnessed such a myopic destruction during my 30 years in the industry.

I am long several commodity companies and the rally is a breadth of fresh air as many, including me, are only hanging on by our fingernails questioning every fact and assumption. What is fact and what is fiction?  What is objective information and what is emotional thinking?

As most know the market is punctuated with great times of elation and great times of despair.  In my view fear is a gazillion times more powerful than greed.

Was there a capitulation?  Unfortunately only history can answer this question but I will write I have not felt this much anxiety since 2008-09 when the face of capitalism changed daily.  Perhaps the only concrete statement to make is the commodity entities are vastly oversold and an argument can be made many issues are priced for a very deep recession.

There is little on today’s economic calendar thus trading will be dictated by the headlines.

Last night the foreign markets were up.  London was up 0.13%, Paris up 0.48% and Frankfurt up 0.82%.  Japan was down 2.25% and Hang Sang up 0.16%.

The Dow should open quietly lower.  A large discount ware house chain posted profits that exceeded expectations.  Is the low margin buyer returning to stores, the impact of lower oil prices?  Tomorrow’s retail sales data can be telling.  The 10-year is unchanged at a 2.22% yield.

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.