Market Watch Weekly | November 23, 2018 | Black Friday, indeed.

Erik Dekker - Nov 23, 2018
 

 

Dekker Hewett Group | Market Watch Weekly


Black Friday, indeed.

November 23rd, 2018

 

The shortened week of trading south of the border did not bring any relief to global equity markets which a saw a pullback in stocks to their October lows. However, this is how the painful retesting process works. Strategists refer to this as the “slop, pop, and drop,” where the market: (1) makes an initial low highlighted by an extreme oversold condition with a peak in volatility, (2) then experiences a sharp oversold bounce that recoups a significant part of the decline, and (3) ends with a retest of the low that brings demoralization and apathy. Sure, there are fundamental excuses for intermediate-term bottoms, but these types of declines are more about human nature following periods of rampant optimism, historically low volatility, and an extreme overbought condition.

Since October lows, however, one could argue that bears have the upper hand given this week’s blow out in credit spreads, the rout in oil prices and the breakdown in FAANGs. Bulls may argue, however, that the ongoing tightening in financial conditions and weak global economic data are bringing the Fed closer to a pause after a December hike. Also, bond yields have stabilized and the bearish narrative is well discounted into stocks. As we have said before, market corrections only seem “natural, normal, and healthy” until you are in one.

Have a great weekend!

 

 

 

Dekker Hewett Group

 

Erik Dekker, BBA, CIM
SVP, Senior Investment Advisor & Portfolio Manager
T: 604.643.7604

Mark Hewett, PEng, FCSI
SVP, Senior Investment Advisor & Portfolio Manager
T: 604.643.7022

Shawn Labelle, CFA
Business Analyst
T: 604.643.7017

Alix Rogers
Investment Advisor Assistant
T: 604.699.0852

Massimo Beltramo
Business Development Associate
T: 604.643.7531

David Ross MacLachlan
Business Development Associate
T: 604.699.0807

Angela Liu
Social Media & Database Coordinator
T: 604.643.7412