Stock Market Recap | October 30th, 2023

A brutal week for stocks. A growing number of investors gave up on the market entirely and sold at exceptionally low prices.

The sense is that a long recession in on the way resulting from the Fed’s raising of rates and intention of holding them high for a long period of time. The fact that inflation remains intact in spite of raises-to-date is alarming. Add to this the collapse of the market for Treasury issues, also due to high rates, and investors are just unwilling to participate in either the bond or stock markets.

Now that the 7 mega-stocks did decline last week, the stock indexes are now in “correction” territory, even though the other 493 S&P500 stocks were already deeply depressed.

These favorite stocks of investors hit new 52-week lows Friday: American Airlines, Bank of America, Best Buy, Clorox, Chevron, Delta, EBay, Ford, Home Depot, Goldman Sachs, General Motors, Hasbro, Johnson & Johnson, Medtronics, Phillip Morris, Southwest Airlines, UPS, Whirlpool and even Moderna and Pfizer, to name but a few.

Our shorts remain the source of our profits. Level 1, regrettably, remains light on shorts, so continues to under-perform Levels 2 and 3.

At some point investors will see prices so low as to be irresistible “bargains” and buy these stocks back, triggering a market rally. Perhaps after Friday’s sell-off that will be soon, but will it be too early? In light of the economy getting worse (don’t be fooled by the surprisingly good and preliminary 3Q GDP figure that is bound to be revised downward later as has been most data during this administration) that may be the case. Conditions remain the most challenging for trading in over a decade.