June 24: Noise in a downtrend

By Jeffrey Cohen, Investment Advisor Representative
​US Advanced Computing Infrastructure, Inc.

Today we are wondering why there is so much movement in the market around the committed downturn in stock prices. We see economics-driven stocks (business cycle stocks) like Citibank, Freeport McMoran, Cleveland Cliffs crashing, but then we looked today and they always go up and down 2-4x, or 1/2 to 1/4. This is what they do as the economy goes from boom to bust.

We see whole industry subsectors of stocks go up in after hours trading, just to fall in pre-market trading. In certain industry sectors, the stocks that go up in after hours go down pre-market, and vice versa. This is movement to scalp pennies, or dimes, on share prices, or to fine tune positions.

The overall trend is negative and down.

Two stocks are dropping that give us pause, and we will do some due diligence. DB and CS are down, and I am concerned there may be a banking problem in Europe.

There is no real economic news today in the headlines. Just commentary. 

Interest rates look to fall today based on the futures, which brings US Treasury Bond and Note prices lower. Could be a small flight from US investments in fixed income.

New lows to new highs maintained a 29:1 ratio today in both corporate equities and corporate fixed income. For every one company stock or bond that hit a new high, twenty nine hit a new low.

Be careful out there. Don't lose sight that we are in a downturn and whatever stock you hold that is exposed to the economy will most likely be lower in a few weeks. Hold if you can / must, and sell if you are unsure.  The first person who sells into a recession wins.  The first one who buys at the bottom also wins.

Best regards and good luck today. GLTA

Jeff