Stocks finished the day lower after economic numbers from China and Europe showed a slowdown in growth rates. US economic numbers meanwhile showed consumer spending higher than expected causing the Atlanta Fed’s Q4 GDP predictor to move from 2.4% to 3%. US equity markets fell and at the close the Dow was off 496 at 24,100. Trading volume was flat to lower. The Dow is back at support levels and for the week, lost about 1.3%.
Since early October, retail investors have been selling stocks like startled doves bolting from a confederate statue and indicators show they are now in a net short position. Meanwhile in sharp contrast, insiders have begun buying stock with both hands. The insider buy/sell ratio has risen to a level seen only 5 times in the past decade. History shows that when the insider buy/sell ratio spikes it generally marks a market bottom. Corporations, which are sitting on near record levels of cash, have also been increasing their stock buyback levels. Lowes, Facebook and others announced bigger share buybacks this week.
The current market volatility can be summed up as a contest between good economic and corporate fundamentals in the US versus global economic and trade uncertainty centered mostly in China and Europe. The disruption in politics and trade policy combined with industry specific disruption from the likes of Amazon and Tesla is creating uncertainty and casting doubt as to whether US fundamentals will hold up in the face of a slowdown in China and Europe.
The Scouts finish up their Christmas Tree sale on Saturday and by all accounts it was a record year. News reports indicated that millennials are more willing to buy a real tree than a plastic one and the Boy Scout tree lot might be anecdotal evidence of that.