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The market had a terrible week this week, closing on a particularly bad note. The last hour of trade on Friday was a straight shot down -1%. What took the market down? Energy the culprit again. This oil selloff has been swift and painful.
If you think your portfolio has taken a beating, 5% is nothing compared to David Fleet, who lost $3 - $4 million of approximately $6 million he invested in the stock market. If your investment portfolio needs a lift, don't look to unregistered and un-certificated notes!
The economic data was pretty good this past week, particularly retail sales on Thursday. The market didn't care though. The only thing that matters to stocks right now is the price of oil. Rig counts came down a bit this week as measured by the Baker Hughes Rig Count. This is the first week of lower rigs. The drop was almost entirely in the vertical trajectory. This makes sense because oil & gas companies have stated the first capital expenditures to be cut will be early stage exploration. Vertical trajectory drills are mainly used in exploration while horizontal drilling is used to increase production of an existing well.
Monday will be interesting, but I'm not counting on a quick market rebound. The santa claus rally looks less and less likely with each percent the market drops. The S&P is only down -3% from its peak, 2074 to 2012. That's nothing compared to the energy sector. The XLE is down 27% from its high in June! Take a look at the chart of XLE; that's a nasty selloff!
Michael Grove, CFA