Bulls Give Yesterday’s Gains Back

Friends

Stocks experienced a difficult day, and we can’t say that we were surprised. After a nice weeklong rally, we were bumping up against some major resistance, that short of some major new catalyst (perhaps something like a spike in oil prices), was going to be difficult for the bulls to penetrate. Comments by the Saudi oil minister here in Houston at a conference, dismissing any hope of a coordinated pause in oil production, caused oil prices to fall. Also, JP Morgan Chase revealed the damage that lower energy prices is having on their loan portfolio, and it was an uglier picture than investors had been led to believe prior to today.

By the close, the Dow Jones Industrial Average was down 188 points to finish the day at 16,431. The S&P 500 was down 24 points to close at 1921. Gold was up $13 to trade at $1,223 per ounce, while oil was down $1.48 to trade at $31.91 per barrel WTI.

As we have been mentioning, a bear market cycle is a process. To have declared that all is clear after a few days of positive share price action would have been somewhat naïve. Having said that, bear markets don’t have to end in an explosion. They can, indeed, end in a whimper. Diligence, patience, and a calm demeanor is the recipe for bear market survival. We just have to let the process play itself out. So far this week, the bulls have a win and now the bears have registered a win. Let’s see how the rest of the week goes.

Have a nice evening everyone.

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