A 50-point bounce in the S&P 500 in the final hour of trading could only do so much. In the end, it was another brutal day for the market.
What was most notable about the action was that both the Dow Jones and S&P 500 undercut the lows they hit in June. Back in mid-August, there were many investors who were convinced that the indexes had seen their lows and that a new positive trend would develop, but that is the nature of bear markets. Big bounces suck in hopeful buyers and then crush them when another wave of selling hits.
The indexes all look very poor now as they are sitting around those June support levels, but it is interesting to note that the biggest stock in the market, Apple (AAPL) , is not even close to its June lows. It has enjoyed very good relative strength. If It had pulled back to its June lows, the indices would be at least 5 to 10% lower than they are now. Apple is covering up some misery, and that may not be a good thing.
The obvious question now is whether we have enough negativity and gloom for some sort of counter-trend bounce in the near term. It isn't worthwhile to think about a bottom right now, but there is always the potential of some relief when things are this bad.
The market will be intently focused on data and comments from Fed members. As we saw today, the situation in other countries like the U.K. is going to impact currencies and bonds, and that is going to be a source of much volatility for equities.
There seemed to be some recognition Friday of the economic pain that Fed Chair Jerome Powell has been talking about so much lately. It isn't just an abstract concept. It has a real impact on real people, and we are seeing it reflected in the stock market.
Once again, I want to remind you that this horrible action is helping to create exceptional opportunities. We just need to stay patient and make sure we have capital in reserve.
Have a great weekend. I'll see you on Monday.