February Flush: Stocks Pounded As Worst Month Since January 2016 Ends

The Dow Industrials lost a total of just more than 1000 points for the month of February, which, on the surface, may sound like a big deal, but, in reality, it amounts to merely a four percent loss.

In other words, if one had $100,000 at the start of the month, it would be only $96,000 at the end. Not much to worry about, right?

Maybe so, but this month-long fall, rise, and fall had a number of interesting characteristics, and the supporting (or non-supporting) data is suggesting that whatever has shaken markets is not yet over, especially when the losses on the final day of the month were the fourth largest of the month and the biggest since the 1000+ point washout on February 8.

The entire month was marked by voracious levels of volatility. Out of 19 trading days, 15 featured closes more than 150 points higher or lower than in the previous session. Breadth continues to erode; Wednesday's advance-decline line showed losers outpacing gainers by a 5:2 margin. New 52-week lows are beginning to pile up while new highs are on the wane.

Economic data hasn't been very encouraging. Today's second revision of 4th quarter 2017 GDP came in at 2.5%, slightly lower than the 2.6% reported in January. New and existing home sales have slumped for two consecutive months, and today's Chicago's PMI reading of 61.9, was a six-month low, down from 65.7 in January.

Inflation appears to be picking up steam in some areas, slipping in others, and bond yields remain elevated in the near term. With the Fed set to raise the federal funds rate in March, there's little to make the case for a sustained continuation of the aging bull market, now approaching nine years since the Great Financial Crisis.

Wednesday's losses left the Dow down 4.6% from it's January all-time highs. It's not exactly a huge obstacle to overcome, but it's beginning to look more like a mountain than a molehill.

Dow Jones Industrial Average February Scorecard:

Date	Close	Gain/Loss	Cum. G/L
2/1/18	26,186.71	+37.32	+37.32
2/2/18	25,520.96	-665.75	-628.43
2/5/18	24,345.75	-1,175.21	-1,803.64
2/6/18	24,912.77	+567.02	-1,236.62
2/7/18	24,893.35	-19.42	-1,256.04
2/8/18	23,860.46	-1,032.89	-2288.93
2/9/18	24,190.90	+330.44	-1958.49
2/12/18	24,601.27	+410.37	-1548.12
2/13/18	24,640.45	+39.18	-1508.94
2/14/18	24,893.49	+253.04	-1255.90
2/15/18	25,200.37	+306.88	-949.02
2/16/18	25,219.38	+19.01	-930.01
2/20/18	24,964.75	-254.63	-1184.64
2/21/18	24,797.78	-166.97	-1351.61
2/22/18	24,962.48	+164.70	-1186.91
2/23/18	25,309.99	+347.51	-839.40
2/26/18	25,709.27	+399.28	-440.12
2/27/18	25,410.03	-299.24	-739.36
2/28/18	25,029.20	-380.83	-1120.19

At the Close, Wednesday, February 28, 2018:
Dow Jones Industrial Average: 25,029.20, -380.83 (-1.50%)
NASDAQ: 7,273.01, -57.35 (-0.78%)
S&P 500: 2,713.83, -30.45 (-1.11%)
NYSE Composite: 12,657.31, -161.91 (-1.26%)

Dow Hangs Onto Friday Gains Amid Late-Session Selloff

It was options expiration Friday and the volatility showed up late in the day, as the Dow shed more than 200 points off a morning rally, closing marginally ahead. The S&P gained a point and change, but the NASDAQ slipped into the red for the day.

The entire trading day came to matter little in the larger scheme, especially for the NASDAQ, which led all indices with a gain of more than five percent for the week.

With markets closed for President's Day on Monday, February 19, investors will take the time off to evaluate foreign markets and prepare for the seven remaining trading days of the month.

Stocks have clawed back more than half of the losses incurred earlier in the month, setting up for a continuation of the short-term rally well in advance of expected rate hikes at the next FOMC meeting on March 20-21.

This leaves stock indices with strong support at their respective 200-day moving averages, bottoms which look less likely to be revisited any time soon.

After some tumult earlier in February, it appears that nothing of import has changed - besides the value of the dollar and rates on treasury bonds - supportive of the proposition that central banks are still in charge and complete control.

Should investors be worried?

Always. But, presently, they are not.

Dow Jones Industrial Average February Scorecard:

Date	Close	Gain/Loss	Cum. G/L
2/1/18	26,186.71	+37.32	+37.32
2/2/18	25,520.96	-665.75	-628.43
2/5/18	24,345.75	-1,175.21	-1,803.64
2/6/18	24,912.77	+567.02	-1,236.62
2/7/18	24,893.35	-19.42	-1,256.04
2/8/18	23,860.46	-1,032.89	-2288.93
2/9/18	24,190.90	+330.44	-1958.49
2/12/18	24,601.27	+410.37	-1548.12
2/13/18	24,640.45	+39.18	-1508.94
2/14/18	24,893.49	+253.04	-1255.90
2/15/18	25,200.37	+306.88	-949.02
2/16/18	25,219.38	+19.01	-930.01

At the Close, Friday, February 16, 2018:
Dow Jones Industrial Average: 25,219.38, +19.01 (+0.08%)
NASDAQ: 7,239.47, -16.96 (-0.23%)
S&P 500: 2,732.22, +1.02 (+0.04%)
NYSE Composite: 12,874.36, +17.49 (+0.14%)

For the Week:
Dow Jones Industrial Average: +1028.48 (+4.25%)
NASDAQ: +364.97 (+5.31%)
S&P 500: +112.67 (+4.30%)
NYSE Composite: +468.54 (+3.78%)