Goat Rodeo of a Stock Market

February 13, 2018

5 minute read

by Michael Antonelli, Managing Director, Robert Baird and Co.

Equities start the day higher as we make the front page of the Journal! I spend a fair amount of time thinking of ways to make journalists laugh so I guess I succeeded with Corrie Driebusch. You wanna know what my top looks like? That. Anyway, enough patting myself on the back, what the heck are we gonna do with this goat rodeo of a stock market? Remember how I used to say we are always on the lookout for “max good news”? Well…..did we get it? Was tax reform and a market up 6% in January the best it gets? I mean it’s possible, let’s not discount the fact that bull markets end in a euphoric surge, but shouldn’t economic data be crumbling too?

If this is the end where is my recession data? How come new home sales and auto sales haven’t topped out? Why hasn’t the yield curve inverted? Why hasn’t the unemployment rate started to rise? What is the record for most rhetorical questions in a recap? So you are sitting there saying “well, if you were on the lookout for max good news why didn’t you give us a warning or something in Jan?” Look, I chose to live in a place where it snows for 3 months, is cold for 5, and I can’t fly nonstop to London so I have to drive to O’hare all the time, I may not have the best judgement in the world. None of us will know when the top is in.

I won’t, you won’t, even my main man Josh Brown won’t. I do know this: it’s hard not to think it’s the 8th or 9th inning especially with interest rates rising, valuations at lofty levels, employment as good as it gets, tax reform behind us, rates starting to rise, and Tiffany’s selling a ball of yarn for $9k. Everyone seems smart in a bull market, everything seems easy in an index fund that only goes up. But you know what…how do you think people feel now? I have a sneaky suspicion you are going to want to be long financial advice in the next few years…

After the open it felt like we were going to head south and we did. 2,655 all the way down to 2,622 where we finally, for the love of God, stopped the slide. I know price determines sentiment but it sure feels like people want to sell the rallies now. We’re stuck between the 50 and the 200 day so “no man’s land” seems appropriate too. Risky stuff bounced (Energy, Fins, Tech) and safety plays fell so at least the composition of the rally was ok. Winners were CSRA, ALXN, MRO, UA, COF, CSX, and RCL. Losers were ULTA, NVDA, GPS, TRIP, and WYNN.

Apparently ULTA is being sued for re-packaging used cosmetics so that’s not good. Anyone tried to buy their wife something in one of these stores? My God….I may as well have fallen into Daedalus’ maze for that Minotaur because holy cow is it confusing. Honey, apparently Philosophy Amazing Grace is all the rage because I gotta get outta here. By lunch the market was grinding on its highs, 2,657 up 1.45% while we watched another Nordic country dominate cross country skiing. Like what age do kids x-country ski in Norway? 2? 3?

The rest of the day felt ok until the last 20 minutes. Sitting here, trading, feeling good, when all of sudden my bids are being hit. SOLD SOLD SOLD. Late day selling in SIZE, which is exactly the kind of price action we don’t wanna see. It appears Bears will not go gently into that good night my friends. We did close positive though, in fact bigly positive. 2,656 up 1.39% so let’s not get too crazy. This is an impt week, we need to see some kind of stability to think humpty dumpty is being put back together. Are we late stage? God yes, for sure. Will the bull market end soon? Maybe, maybe not, but I’ll be here to make you laugh either way!

Final Score: Dow +170bps, S&P500 +139bps, Nasdaq +156bps, Rus2k +89bps.

News Highlights:

Succinct Summation of the Day’s Events: We bounced….it can happen in these crazy volatile periods. No reason for this bounce but we’d need a whole lot more bounce to be out of danger.
Fantastically spot on for all my advisors out there: “In truth if you need to find a strategy after markets have started falling it’s too late. For most of us the only sensible approach is to only buy things we’re comfortable holding through any kind of downturn and to then do nothing when volatility strikes. But even experienced investors face the urge to do something – anything – in the face of mounting losses. This is action bias, in action”.
Apparently the Winter Olympics are too “wintry”: "It has to be absolutely petrifying, terrifying, being up that high in the air, and having a gust 30 mph coming sideways at you," said United States Ski and Snowboard Association CEO Tiger Shaw. Ok look, let’s pick 5 winter locations and 5 summer locations and stop this charade. Let them build the infrastructure in places we can rely on then show it to us LIVE. Enough with the tape delay BS. This isn’t 1980, I’m not recording this on my VHS. Push it to my phone for crying out loud.
Shaking out the excess isn’t a bad idea: “People have been warning about excesses in the markets for years now. “Picking up pennies in front of a steamroller” is a phrase I’ve heard for some time now. That steamroller did some damage this week to those picking up the pennies. This correction hasn’t completely changed the fundamentals of the markets but a quick slap on the wrist for those investors and traders who have been taking too much risk is a healthy development for those worried about market excesses causing another bubble”.
Riddle me this Batman: Are we fighting against “passive” or “low cost” because I know the right answer: “Investors actively abandoned the world’s biggest passive fund during the onset of market mayhem”. That’s right…all those “passive” investors BAILED.
Disney just hiked their price $5 which, if we’re being honest, isn’t enough to thin out the parks. I imagine the price would have to be in the 2s to finally hit demand. It’s like ski slopes for crying out loud.
Mom’s and Dad’s are just different people ok? Nothing wrong with either style.
I wanted to have a gif recipe in every recap is that fine? Are you guys into these? (I’m making this one for sure)
I skied here! Can you name the place? (hint: it’s the back of a famous mountain)
Ever seen someone hole a 7 iron off water? Well now you have