Thursday Oct 11, 2018
There are a few notables about the stock sell off, several are mentioned in today's Heard on the Street column
Global markets around the world have been selling off for some time. Here is Europe Far East compared with the US SPX in green. It was not logical that the US would continue to out perform the world.
Such sell offs usually see what is termed 'a flight to quality' which means yields on govt bonds fall.
But bond prices failed to rise and yields did not fall, ie no flight to quality.
FANG stocks have been selling off for the last month. As noted in recent posts, five or six stocks have propelled the NASD to new highs while most of teh NASD has been selling off all year.
Most stock indexes have not re tested 200 week moving averages since early 2016. The uptrends are still in tact. I would expect at least a sell off comparable to last February but really the Russell is already there down 150 poiints.
I was probably wrong to give up on gold as it is rallying today and did not get hit yesterday. Gold needs a weekly close over 1212. Silver probably need a weekly close over 15.
My take away is that we are headed for higher interest rates. And check out Dan Henninger's column on the lack of civility. Hillary says the Dems cannot be civil until they re take the House and Senate. So expect negative mod to continue. The fact that social mood lurched down so fast with Feinstein holding back the letter until the last minute does not bode well for the markets. With the elections three weeks off, we may not see much rally until the results are known.