Your Monday Market Blip 1/11/16

Your Monday Market Blip 1/11/16

Oil prices continue to break down sparking concerns that low prices reflect a weakening global economy with the epicenter located in China. The Dow ended the day up 51 to 16,397 thanks to a late rally. Trading volume was higher.
WTI crude today fell 5.9% to $31.20 a barrel. During the day it had traded below $31 and several investment houses from Morgan Stanley to Goldman Sachs are now predicting that oil could fall into the $20 price range baring a supply disruption in Saudi Arabia. Natural gas was lower by 4% but is still about 30% above recent lows. The global energy glut marches on bring with it fears of deflation.
With the Dow down about 6% since the beginning of the year it pays to take a look at history. A market “correction” of 5% usually happens three times a year and these are usually a couple months in duration. A market “correction” of 10% occurs on average about once a year and lasts a bit longer. A “bear market” is when stocks fall 20% or more. History shows that these occur about every 4 years on average and can last a year. Corrections usually turn out to be good times to buy while bear markets, due to their length, usually require being cautious and having cash to balance out safety and risk depending on your situation. It is good to remember that most market gains, while unpredictable, occur in short bursts usually after some negative news has pushed markets lower.
Alcoa aluminum will report 4Q earnings after the closing bell today. The company expects to report lower earnings and revenue as end shipments in China and Asia are offsetting higher shipments for the auto and aircraft industry where Alcoa has recently signed a $2.5 billion supply contract with Boeing.