Oct 15th 2014 – Stocks Recover Considerably After Freefall

Market Correction

Market View:

Having been in cash for nearly 3 weeks through most of this drop off, I again had no fills on the orders I placed last night as I only re-buy on strength.  And there wasn’t much of that on display for the first half of the trading day.

Although I was very impressed with the comeback today, the S&P 500 was down over 50 points before closing down a mere 15.

So, I think given the market bounce at 1820 on the S&P, we will see a decent uptick from here.  So if you ask me, the bottom is in and we will see at least a considerable lower high on the chart in the coming week.

I will stick my neck out and say I would be surprised if we see 1820 again for a few weeks, if not longer as greed replaces fear in the market.  There was also significant volume at the lows today to warrant this potential outcome.

Market News:

U.S. stocks closed down on Wednesday but recovered significantly from historic intraday losses amid concerns about Europe, Ebola and the economy.

The Russell 2000 and transports turned positive as stocks came off lows in the last half hour before the close. S&P 400 midcaps also traded higher, and the Nasdaq traded briefly in the green.

The Dow Jones Industrial Average closed down 173 points, or 1.06 percent, at 16,141.74, with JPMorgan Chase the greatest decliner as six blue-chips gained, led by Johnson & Johnson.

In a cumulative move of about 1200 points in losses and gains, the Dow came off session lows of a 458-point drop to below 16,000, a level it has not breached since February 14. The drop was the index’s largest intraday loss since a 552-point decline on Sept. 22, 2011.

Earlier, the index fell as much as 369.59 points in the open, or about 2 percent, with the initial decline led by Intel and Disney.

The S&P 500 recovered losses to close down just 15.2 points, or 0.81 percent, at 1,862.50, with financials knocked the hardest and materials and energy the only sectors of 10 gaining.

Prior to the start of trading Bank of America posted a smaller-than-expected loss, while BlackRock reported better-than-expected earnings.

The Nasdaq dipped into correction territory and even turned positive before closing down 11.8 percent, at 0.28 percent, at 4,215.32.

In the morning, European stocks closed more than 2 percent lower on Wednesday as investors shunned risky assets on fears of crumbling global growth, weak economic data, and concerns about the political situation in Greece.

In the United States, transports recovered completely to close up 0.23 percent after a fall of about 2 percent in late morning trade led by a decline in airlines on reports that the new Ebola patient flew the day before falling ill. However, analysts said there were no reports of flight cancellations due to the disease and added that the news had more of a psychological effect.

Stocks held to a downward trend after the Fed released its “Beige Book” that said the economy is growing at a “modest to moderate” pace.

Business inventories rose less than expected in August, and U.S. retail sales fell 0.3 percent in September, slightly more than the expected 0.2 percent decline. The producer price index for September fell 0.1 percent as opposed to expectations of a 0.1 percent gain.

Thursday:

Earnings: Goldman Sachs Group, Google

8:30 a.m.: Weekly jobless claims for week ending Oct. 11

9:15 a.m.: Industrial production for September

10 a.m.: Home Builders Index for October

10 a.m.: Philly Fed

News Sources:  CNN Money & CNBC

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