Buyers came out from their New Year’s hangover to push stocks higher by the close of the session. Small Cap stocks who have been leading to the downside led the march higher today. The NASDAQ was runner-up while the S&P 500 lagged behind. Overall, the price action as a whole was solid even with the late afternoon hiccup. Just after 1:30pm EST, stocks hit a road bump whereby sellers were able to send the market lower rather quickly. We quickly recovered and pushed back to set a new high on the session. Preliminary volume readings show volume was mixed on the session as turnover was higher on the NYSE and lower on the NASDAQ. A decent day for the markets and while the S&P 500 lagged roughly 35 basis points behind the NASDAQ it was a decent day across the board.
Bespoke had an interesting tidbit last night on the market where they combed market action and found 8 instances where the market started a year on a 3 day or more losing streak. Two such times a year started in the red 4 days in a row. I don’t know about you, but I am not sure a sample size of 8 instances qualifies as a reasonable sample to derive any conclusions about. Even with that, the average gain for the market is roughly 7% with a few 20% years sprinkled in and two down years. It appears pundits now have to reach into every little minute detail and try and form analysis from it to appear smart. If the sample size was say over 1000 it may have a bit more weight to it, but 8 is not something we want to entertain.
Volatility had an interesting day opening much lower, but finding support into the close. So much is being made out of whether or not the market will or won’t have a 10% or more correction and when you look at the VIX it appears not too many are worried. When the VIX is at a 12 level we wouldn’t expect future gains to be tremendous as say when it is above 20. However, it does not mean we can’t have gains. So many will try to gauge whether or not we’ll see gains simply by looking at where the VIX is and completely miss the true indicator. Price will always be king and where we’ll reside.
Friday’s job report inches closer and the unofficial kick off to earnings season is fast approaching too. Stay the course and ride those winners.
