Thursday, September 29, 2016

Stocks Slip In Afternoon Trading; Where's The Window Dressing?

Stocks continued their up-and-down action on Thursday, posting one of the larger losses of the season, something that's becoming more and more commonplace as the election nears.

Perhaps investors and speculators are playing a game of chicken, day-trading on quick profits (a likely scenario), or perhaps more are coming to the realization that all is not well in the US or global economy and shocks such as experienced by the recent Brexit vote could contribute to more disorder.

The Commerce Department today announced the third and final estimate for second quarter GDP, a disappointing 1.4%, another reminder that the economy is not picking up any steam and may be stuck in a semi-permanent state of stagnation and denial, with outright deflation lurking at every turn.

The reality of the situation is that Americans seem fairly content with the way things are economically, at least on the surface. However, good-paying, long-lasting jobs and careers are harder and harder to come by and what used to be fixed costs, such as utility bills, property taxes, and other fees for services (think health care) continue to ratchet higher in cost on an annual basis.

Also of concern are diminishing corporate profits, which have been heading south for the better part of two years. It's simply more difficult in a tight economy to wring out better and higher EPS and bottom line profits.

Market analysis being a somewhat difficult and thankless task, those are at least some of the potential catalysts for today's declines on the major indices. Tomorrow being the final day of the month and the quarter, one should be looking for "window dressing," wherein fund managers buy up stocks seemingly in favor to add to the portfolio and prospectus. Oddly enough, we may be witnessing window shading instead, as fund managers shed stocks that are under-performing, currently about 65% of the market.

With only a few key stocks keeping the averages afloat, the time for a major pullback has probably long past, since the Fed continues to prop up the market with its easy money.

Thursday Tumble:
Dow Jones Industrial Average
18,143.45, -195.79 (-1.07%)

5,269.15, -49.39 (-0.93%)

S&P 500
2,151.13, -20.24 (-0.93%)

NYSE Composite
10,643.48, -109.97 (-1.02%)

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