Commentary

George Chamberlin

GEORGE CHAMBERLIN has been associated with The Daily Transcript at SDDT.com since 1998 and became Executive Editor in 2006. He is responsible for the development of editorial strategies for the newspaper and website. He has introduced video and audio into the editorial products and is the public face of the company at many community events. George regularly chairs industry roundtables and conducts video interviews of participants for use on the San Diego Source. He writes two daily columns, "Money in the Morning" and a daily stock market wrap-up.

George, a long time resident of North County, lives in Vista with his wife Terry.

From the Executive Editor

It was a sight to behold. First, let me make a confession. I was actually on the golf course yesterday when the stock market was closing so it was a real shocker when I looked on my phone and saw the Dow industrials had gained 421 points, the biggest one-day gain for the Dow in three years. Not that it came as a surprise. The markets this year have been immune from a sustained decline in prices. Sure, a 5 percent correction here and there, but the big drop remains elusive. Many thought it was at hand last week when the Dow dropped 3.8 percent but that turned out to be just another bullish head fake. With less than two weeks -- just eight trading sessions -- left in the year there is still a pretty darned good chance 18K is doable.

By just about every measure, the U.S. and local economies are ending 2014 in better shape than most experts expected a year ago. Consumers have flexed their financial muscles and everything from car sales to holiday spending has benefited.

Santa is back. Yes, after two weeks of skidding stock prices as a result of the plunge in oil prices, investors have decided to bring back the Santa Claus rally. To be sure, Santa got a little help from Janet Yellen and her team of merry economists at the Fed who decided to remain "patient" in making any changes in monetary policy. While it appears that the first hike, be it a very small one, in short-term interest rates could happen mid-2015, Yellen made it very clear in her news conference yesterday that there is no rush to make a move. Inflation remains very, very low, which gives the Fed wiggle room when it comes to rates.

The stock market was just like the weather yesterday, changing all the time. At one point the Dow industrials were up more than 240 points, only to hit the skids and finish with a loss of 112 points. It seems almost impossible to get a handle on things with oil prices making big swings in price as well. Crude traded as low as $53.60 a barrel during yesterday's session, only to close at $55.93.

Stocks continued to slide Monday, going down the same slippery slope as oil. Efforts to rally stocks were evident at the start of trading when the Dow industrials were up triple digits. But as the session progressed and oil hit the skids, stocks followed to finish with the index down an odd 99.99 points and a seven-week low. As has been the case several times this year, the markets were unable to benefit from the good economic news about the overall economy, employment situation and controlled inflation.

Some investors are finding they don’t have to wait until Christmas to open their presents — they’re already getting something extra in their stock stockings.

The seven-week rally on Wall Street came to a quick halt last week. Fretting over the sharp drop in oil prices, investors determined it was time to take some profits and drove down the Dow industrials by 3.8 percent, the biggest one-week decline since November 2011. As has been the case often in 2014, the markets seemed to ignore the good economic news and focus on the what-if scenario linked to oil. By the way, it is not uncommon for stock prices to decline during the middle of December -- the best month of the year for stock prices -- as many people do tax selling of weak assets to balance out the gains of their winners. Just my opinion, but I wouldn't give up on the possibility of the Dow reaching 18K before the end of the year.

The new year is just a few weeks away and most of the early forecasts are painting a pretty picture for 2015. However, an unanticipated wrinkle — plunging oil prices — may put a damper on many of these projections.

It could have been better. Stocks appeared to be on their way to a nice bounce-back rally yesterday -- the Dow industrials were up 225 points at one time -- but by the close the gain had been whittled down to just 63 points. Granted, it did snap a three-session losing streak but the global implications of sharply lower oil prices took the steam out of stocks. It looks like the major indexes, which have been up for seven weeks in a row, are going to suffer a loss for this week. Try not to panic.

Three in a row. Yes, stocks do go down from time to time. The Dow industrials fell 268 points yesterday and have declined in the past three sessions. During that period, the index declined 2.4 percent. How bad is the drop? Well, the Wall Street Journal had a graph in today's paper showing the decline and called it a "free fall." Geez.

A near miss on Wall Street yesterday. Things were looking rather bleak for a while as the Dow industrials dropped nearly 220 points in early trading. But as the session progressed, the blue chip index slowly worked its way back and finished with a modest decline of just 51 points, or 0.3 percent. The Nasdaq actually was up 26 points as small cap stocks, beat up during the September/October decline, have come roaring back.

Oops. A funny thing happened on Wall Street yesterday, stocks went down! After tickling the 18K mark Friday, the markets saw a small wave, maybe a ripple, of selling yesterday with the Dow industrials falling 106 points, a decline of 0.6 percent. There is more selling in early trading today and if it sticks it will be the first back-to-back drop in the Dow in nearly two months. Of course, the beleaguered permabears out there are hoping against hope that the small decline yesterday marks the start of the big sell-off. For instance, MarketWatch.com leads with this headline: "You must believe in magic to buy stocks now." Another story on the same website says, "This veteran trader sees 10 percent correction within weeks." Wonder how many times this "veteran" has said that over the last couple of years?

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