Market Commentary, 02/09/18

As I am sure you are aware, the markets have exhibited significant volatility this week. The market closed down last Friday followed by the Dow closing down a record 1,175 points on Monday, with an intraday decline of over 1,600 points. This steep decline was more than likely emotional, as weaker investors sold as they saw the market fall. Following the emotional decline in early trading, it appears the algorithms used by some traders sold into the weakness as well causing the late day accelerated decline. The Dow recouped half of Monday’s decline on Tuesday, in a day that saw a whipsaw in the market of 800 points from the intraday low to the high. Wednesday was relatively calm and closed down slightly. Yesterday saw the market fall continuously throughout the day, closing down over 1,000 for the second time in the week. Today the Dow oscillated over 1,000 points from top to bottom, finishing up 330 points at 24,190. This marks a weekly decline of 5.2% for the Dow.

In spite of the volatility noted above, nothing has changed in the stock market. All of the same positive economic data mentioned last week are in play. In fact, with half of the S&P 500 reporting for Q4 2017: 80% have reported positive sales, 75% had earnings higher than expected, and the earnings growth for the S&P 500 is 13.4%. So despite the market correction, fundamentals are still strong. (Source: Factset)

As the market declined over the last several days (today included), the stop limit orders we placed in your TD Ameritrade accounts were triggered, effectively limiting losses and, in most cases, locking in gains on those positions. While this was the purpose of the stop orders, the result is that your account is now heavy in cash (as much as 100%).
Our expectation is that the market will continue to be choppy (i.e. large intraday movement, up then down) in the short term. The result is that over the next several months the market should be strong giving us good buying opportunities in the coming days/weeks.


Jeremiah Patterson, CFP®
Copelin Financial Advisors
514 Brooks Street
Sugar Land, TX 77478
Phone: 281 240-2902
Fax: 281 240-2856

Securities offered through ProEquities, Inc., a Registered Broker-Dealer and Member FINRA & SIPC Advisory Services offered through Harvest Investment Services, LLC., a Registered Investment Advisor Copelin Financial Advisors, Inc and Harvest Investment Services, LLC are independent of ProEquities, Inc.

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