Global anxieties are finally impacting the stock market as images of unrest in Hamburg, Germany and the growing realization that North Korea won’t go gently into that good night sent stocks tumbling into the close on Wednesday.

All eleven S&P 500 sectors finished in the red, including energy, which should have been higher on another deep drawdown of crude, gasoline inventories, and utilities. It’s where investors normally join widows and orphans when things get rocky.

Ironically, anti-capitalism protesters took a chunk of wealth out the wallets of capitalists and exposed a growing anxiety with markets and western leadership to deliver on economic promises.  

A good jobs number today could bring some calm, but a weak number could hasten this downside swoon.  Interestingly, market declines could have been a lot worse, considering the breadth of the internals.

On the NYSE 2,213, declining stocks were 240% more than advancing issues, but the declining volume of 1.6 billion shares was 350% more than the advancing volume.

For the NASDAQ, there were 2,377 declining stocks to only 556 advancing names, while declining volume was a whopping 540% more than advancing.  Moreover, 49 stocks hit 52- week lows versus only 40 closing at 52-week highs. The tide has turned.

From a technical point of view, all the major indices closed at their 50-day moving average except NASDAQ, which couldn’t hold that key indicator. The inability to hold means potentially dropping to the 200-day moving average, which is a long way down from yesterday’s close.

Fundamentals to the Rescue?

Yesterday, the Institute for Supply Management (ISM) non-manufacturing number came in much better than expected; 16 out of 17 industries posted gains. This is great news, and it hints at a stronger economy; it mostly justifies the rally we’ve already enjoyed.

It’s not a time to panic, but it’s time to reassess everything, including taking profits and losses. 

Tale of Two Cities

‘Surge in NYC's Apartment Prices Breaks Records, Report Finds’

‘Number of homeless people in city up by 39% in just one year’

Americans are losing faith in the ability of capitalism to make their lives better. Sadly, this actually makes it harder for capitalism; Americans must buy into any economic system in order for it to work (some do it temporarily; others in perpetuity). In fact, many pockets of the United States aren’t operating under true capitalism.

Many cities and states are de-facto welfare states where the wealthy can afford to pay high taxes, the middle class barely gets by, and the poor simply remain poor.

This is the why populism is surging along with the elite parties in France -let’s face it, the winner is an elitist – we’re crushed for the very first time.

I’m not sure where this is going, but all the bailouts, printed cash, and other forms of crony capitalism are undoing two centuries of success in America. It’s time to right the ship before we begin to leap into economic systems that have already failed miserably over and over again.

Today’s Session

Well, the job numbers are out, and the headline number knocked the cover off the ball and prior months have been revised higher as well. 

In June, 222,000 jobs were added versus consensus of 174,000.  That is huge.  Sure, the nation can do a lot better, but the street was bracing for a much lower number.  Highlights for me include 361,000 people getting back in the labor force and another strong month for those dirty fingernail stocks.

Goods Producing

• Mining +8,000 (+56,000 since October 2016)
• Manufacturing +16,000
• Construction +8,000

Sell on the News

There are many aspects of investing I find infuriating, including selling on good, even great news.  Part of this phenomenon is assuming good stuff won’t continue to happen.  I get that in the sense I become melancholy in August because I know summer will be over soon, but that doesn’t apply to investing.  Great companies often stay great for a long time and really great companies have a history of coming back from adversity.

Watching the futures this morning, I sense there is an urge to sell this great earnings report.  If that happens, don’t lose faith because it’s not built-on facts and trends, but knee jerk selling based on hunches and machines.  (We are seeing this phenomenon play out with crude oil, which should be above $47.00 now, but breaking under $45.00.)

If you are in this for the long haul, don’t let reactionary forces of the crowd shift your position(s).