After the open… The market is bouncing back from a decline of several days, and with the S&P 500 up about half a percent so far this morning. As a rule of thumb, if it doesn't hurt yet, the correction isn’t over yet, and yesterday was the point – about a 7% drop – when investors begin to show signs of discomfort. While today may or may not be the real bounce, remember that when the market does bounce, it bounces like flubber, rising higher each time.
Worth considering now – there is money on the sidelines that can't go into bonds because of the rising rate environment, nor toward international markets because of global economic weakness, nor into commodities because of the rising dollar. That means it will stay on the sideline only until fear fades, and then it will go right back into the US stock market. The S&P 500 now has a sober average P/E of 18.3, and Q3 earnings, led now by an excellent report from Citigroup (C), look very strong. In all, it’s a formula suggesting the next leg of the bull market will be as strong as any that have come before. Let the prognosticators cry over their charts. If you want value, it's there.
Here are your Tuesday morning market metrics. Industries doing well today include Diversified Consumer Electronics, Semiconductors, and Electrical Equipment. Industries showing weakness include Building Projects, Healthcare, and Household Products.
The VIX is down 6% to 23.09 after closing on Monday at 24.64. The most active option strike this morning is American Airlines (AAL), with 14,289 November 38 calls changing hands, apparently initiated as buys. The put-call volume ratio is 1.11, (602,440/671,448) That's absolutely huge volume for a 9:00 AM report. NYSE Adv/Dec 2,004/960. Nasdaq Adv/Dec 1,697/674.
Julian Close has been a business writer since the first day of the twenty-first century, having written for PRA International and the United Nations Department of Peacekeeping. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. He became a stockbroker in 1993, but now works for Fresh Brewed Media and uses his powers only for good. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.