If you were hoping the stock market would have a change of heart on Thursday after it had an evening to digest the Fed rate hike and Chairman Powell's news conference, you, like me, were sorely disappointed.
Powell didn't say much to get me bulled up, but as someone who prefers to be optimistic and trade from the long side, I look for the silver lining in every situation. However, as Jesse Livermore is credited with saying, "There is only one side of the market, and it is not the bull side or the bear side, but the right side." And for the time being, the bull side is not the right side.
Speaking of the bull side not being the right side, did you see Thursday's after-hours reaction to earnings reports from PayPal Holdings (PYPL) , Cloudflare (NET) , Atlassian (TEAM) and Twilio (TWLO) ? While these reports, or rather the outlooks, weren't great, the after-hours price action was brutal. TWLO ended the day down around 24%, TEAM lost nearly 22%, and NET and PYPL lost between 11% and 13%. These reactions indicate that the worst, or even reduced outlooks, have yet to be priced into last year's growth companies.
The Nasdaq generals aren't faring much better, with Alphabet (GOOGL) , Microsoft (MSFT) and Amazon (AMZN) all closing Thursday's session at new 52-week lows. And before you bother running to hide in shares of Apple (AAPL) , you should know that the tech world's darling is less than 6% from its low for the year.
The bottom line is that stocks, and growth stocks in particular, continue to struggle. While energy, solar, defense and a small handful of other industries continue to buck the bear market selling, it will be difficult for most investors to entertain the possibility of a market bottom until tech stocks find a bottom. That's why this is a good market for trading but not one in which I'm interested in building many swing-style investments.
One more thing...
Bear markets are exhausting. However, we can't sleep on this morning's employment report, next week's Consumer Price Index (CPI) report or the midterm election results. While I won't be surprised to see this morning's jobs data come in hotter than expected, and I won't bother trying to opine what next week's inflation data will show, I expect the midterms to favor the Republicans. I don't want this to turn into a political debate, but my hunch is a swing in control in Congress could help usher in a bear market Santa Claus rally.