25 Nov THE UNIQUENESS CONTINUES
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%.