We are in unique times.  Bloomberg writes a rare event happened last week, occurring only 18 times in the last 23 years.  That works out to 0.08% of the time.  The advance minus decline line exceeded negative 800 meaning there were more than 800 declining companies versus advancing.  However volume in the declining shares accounted for the minority…47%.  This is only the second such occurrence this decade.  Last occurrence was May 2010.

Naturally one would expect breadth and volume to confirm one another.  Bloomberg writes this kind of rare divergent action is positive as often it suggests a transition into a more stable market.  Twelve of the eighteen times occurred in 2000, the year that the NASDAQ commenced its 80% plunge but the typical stock outperformed for the next seven years.

Will history again repeat itself?

Many have suggested 2016-19 is very similar to the 1997-2000, a view that I share.  Will 2020-2027 be analogous to 2001-2007?  For those who are not myopically focused in technology, all hope yes.

One must remember that everything ultimately reverts back to the mean.  The pivotal question is as to when.  Today the distortions are great in both the equity and bond market.

What will happen in this holiday shortened week?  Trade has been the one and only catalyst.

The economic calendar is light in this holiday shorten week.  Data consists of several home and manufacturing statistics and the release of the Beige Book.

Last night the foreign markets were up.   London was up 0.89%, Paris up 0.41% and Frankfurt up 0.45%.  China was up 0.72%, Japan up 0.78% and Hang Sang up 1.50%.

The Dow should open nominally higher on China’s decision to tighten intellectual property rules, a major issue within trade negations. The 10-year is off 4/32 to yield 1.73%.


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.