The 1-Minute Market Report – November 23, 2018

The short answer is... a metric shit-ton of damage. People are scared, and many are heading for the exits. But the longer answer is... not much damage when compared to previous corrections. Don't forget that we are only down 10% from the last high. That's a correction. Corrections are common in the market, and we shouldn't make too much of a big deal about this one.

A review of the numbers should give us a better sense of what's really going on in the market.

Compare the periodic returns as of last Friday to the same readings from 7 weeks ago when the market began to misbehave. You can see that the market is still under considerable pressure. The rally of 2018 is petering out, and it's an open question whether the market can regain the high ground at 2,930 on the S&P.

Key Markers

Now compare the distance from key markers as of Friday, versus the same numbers from 7  weeks ago. The support price I'm using is 2,581 which is the low price we reached during the last correction in January-March of this year. 

We are now just 2% above that level, but as I said, in a fluid market like the one we're in right now, anything can happen. If we break 2,581 I'm going to become quite annoyed, and there's no telling what I may do.

Chart 2. Distance from Key Markers

Put on your contrarian hat for this one. The Fear vs. Greed Index, as shown on MSN.com, is at a very fearful 13 on a scale of zero to 100. What I take from this is that too many investors have moved to the fear side of the boat, and that usually means that things are about to go the other way. I expect a rally, and maybe even a strong rally, before this ageing bull gives up the ghost.

By now most of you have become familiar with the Market Dashboard. What we see this week is a market that is clearly under pressure but not ready to give up. Items of concern are the year-over-year change, which is now just 1.3%, and the downtrending 50 day moving average. It's getting uncomfortably close to the 200 day moving average, and if it drops below that, the technicians will be out in force calling for a bear market.

It's getting harder to stay invested in this market, but that's what I'm telling clients to do. I've told them to raise a little more cash so that they can take advantage of opportunities that come along.

For a full analysis of the probability of a bear market or a new recession, see my Monthly Intelligence Report. 

As always, if you like what you see, or have suggestions for improving this recap, leave a comment below, or email me at info@zeninvestor.org