Today’s trading has been very volatile, with stocks dipping sharply at the open, bouncing higher and then fading a little bit since. There are a lot of developments influencing the market, and I wanted to post this update for you.
First, AbbVie’s (ABBV) deal to acquire Shire Pharmaceuticals (SHPG) looks to be unraveling, as management announced this morning that they were reconsidering their $55 billion acquisition bid. In addition, another Ebola case was reported in Dallas. And even though there were positive developments regarding the spread late yesterday, as the plasma transfusion of the first nurse infected appeared to be working, this morning’s announcement increased fear that the virus will continue to spread. In addition, a number of hedge funds and value long only firms have been in oil and oil service stocks, and as they cut their positions loose, there will be plenty of pain to go around. Concerns also linger about Europe’s economy, and the U.S. economic data came in weaker than expected.
I still expect a strong finish to the year, but in the very short term, this morning’s action pulled the S&P 500 to 1% away from a full 10% correction. We haven’t seen that in a while, and I do believe we’ll see buyers step in. The market is looking oversold in the short term, and I’ve been watching the Russell 2000 closely. It is made up of small-cap stocks, which have struggled, but has been acting better than the large-cap stocks. It’s interesting to observe this rotation from the big companies that have held up well back into Russell 2000 stocks, and we could see similar money flow in the coming weeks and months as the first hit become the first to recover.
I expect us to be able to play the current trading environment with both puts and calls. There are several potential trades on my screen, and I want to be careful about when we get in and out. As always, I will be in touch right away when it’s time for us to move.
Special Market Update
Today’s trading has been very volatile, with stocks dipping sharply at the open, bouncing higher and then fading a little bit since. There are a lot of developments influencing the market, and I wanted to post this update for you.
First, AbbVie’s (ABBV) deal to acquire Shire Pharmaceuticals (SHPG) looks to be unraveling, as management announced this morning that they were reconsidering their $55 billion acquisition bid. In addition, another Ebola case was reported in Dallas. And even though there were positive developments regarding the spread late yesterday, as the plasma transfusion of the first nurse infected appeared to be working, this morning’s announcement increased fear that the virus will continue to spread. In addition, a number of hedge funds and value long only firms have been in oil and oil service stocks, and as they cut their positions loose, there will be plenty of pain to go around. Concerns also linger about Europe’s economy, and the U.S. economic data came in weaker than expected.
I still expect a strong finish to the year, but in the very short term, this morning’s action pulled the S&P 500 to 1% away from a full 10% correction. We haven’t seen that in a while, and I do believe we’ll see buyers step in. The market is looking oversold in the short term, and I’ve been watching the Russell 2000 closely. It is made up of small-cap stocks, which have struggled, but has been acting better than the large-cap stocks. It’s interesting to observe this rotation from the big companies that have held up well back into Russell 2000 stocks, and we could see similar money flow in the coming weeks and months as the first hit become the first to recover.
I expect us to be able to play the current trading environment with both puts and calls. There are several potential trades on my screen, and I want to be careful about when we get in and out. As always, I will be in touch right away when it’s time for us to move.