If you’ve been watching the stock market in April, you probably need some Dramamine. It’s been a dizzying month for investors as the wide price swings have returned in force. In fact, the last 10 trading days have all experienced 100 point price swings intra-day on the DOW. And 4 of the 10 saw 200 point swings in a day. This type of price action is indicative of the heated tug-of-war between the Bulls and the Bears. Despite the big sell-off last week and the rally this week, the DOW has moved merely 4 points to end those 10 sessions. If you haven’t been watching the Market, you’d think it hadn’t even moved.
As investors, we try to stay the course for the longer-term journey, while protecting against shorter-term turbulence. There’s always going to be something to rattle investor confidence. So far, neither earnings misses nor violence in Ukraine has taken away this 5-year Bull run. That doesn’t mean it can’t or won’t. The Bull entered the year overdue for a breather. This sideways action has provided a resting point. The Market is correcting.
Within this correction, some stocks have experienced a major sell-off, while others have actually rallied. More defensive, dividend stocks have done well in 2014. Momentum growth stocks that flew like rockets have come back down to earth. This is a normal and healthy process. One thing is certain: demand for US stocks remains strong.
Speaking of Strong- “Boston Strong”. It was a year ago on Patriot’s Day that one of the biggest tragedies on American soil occurred at the finish line of the Boston Marathon. It was a frightening period. It was also a uniting event for our nation, as well as a reminder of the dangerous world we live in. Our thoughts are with the victims and their families. Exactly 239 years ago, a great American patriot named Paul Revere rode off on a midnight ride from Boston to Lexington to warn the British invasion. “One if by land, two if by sea” was the indicator of the number of lanterns in the tower of the North Church.
We’re keeping our eyes wide open for all signals indicating the next move for the Market. We expect more volatile price action ahead. The Market is closed Friday in observance of Good Friday. Our office will be closed too. We’ll be back dark and early on Monday. Happy Easter.
By: Mike Frazier