The beatings will continue until morale improves. Yesterday’s close was a nightmare for premature dip buyers. The S&P 500 lost 1.65% on the day, all of it coming in the last two hours. At this point the most obvious catalyst for the selling is selling itself: institutions were afraid of stocks not holding support so they tried to beat the rush out of equities. The rout was on into the close.
The S&P 500 is now below the 200 day moving average for the first time since 2012 and off 6.8% from recent closing highs. Our next support comes at about 1,850 where we started the year.
By way of fundamental news the banks report this morning but don’t expect much help there. It’s a little like desperately searching for a cop and finding Barney Fife. JPMorgan Chase & Co.(NYSE:JPM), Citigroup Inc(NYSE:C) and Wells Fargo & Co(NYSE:WFC) report today. JPMorgan apparently accidentally released early and missed by a couple cents but it was quickly retracted. Regardless, as I believe I was the first to go on record as saying: earnings from banks don’t matter. It’s the tone and outlook.
What I want to hear from JPMorgan is an update on security. Last week Jamie Dimon said the bank would double its spending on cyber security to $500 million a year over the next five years. That only works out to about a 15% growth rate and is 1/50th of the roughly $25 billion the bank has paid in fees and fines since 2012. We need more, Mr. Dimon.
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