The Coin Flip Market

US equity markets continue to trade in a volatile range filled with tricks and traps, nothing is easy in this market. The tables are turned on an almost daily basis and neither the bulls nor the bears can feel comfortable with their positions from day to day. I have a new term for the current market environment, it is the “coin flip market”. Are stocks cheap at less than 12x earnings with a S&P dividend yield that is higher than the yield on the US 10-year note? Is Europe going to break apart? Is economic confidence so damaged that companies will permanently cut back on hiring and slash their work forces? Will the Federal Reserve introduce another round of stimulus?

Yes it is all very confusing and enough to drive you crazy- the violent 5-week range since the early August waterfall decline is the manifestation of the tremendous uncertainty currently facing market participants. It is worth noting that the market leading sector ($QQQ) has held up very well relative to the rest of the market and has made a series of higher lows. When you boil it all down and sift through the sea of noise, the fact is that nobody knows with any degree of certainty where this market is headed. At today’s closing level of 1162 on the S&P 500, right in the middle of the recent range ($SPX 1101-1230) we are truly in a coin flip market.

 

 

 

 

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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