Notes From The Street: 'It's Different This Time'

The following in an excerpt from Timothy Anderson's (MND Partners) morning note. He can be found on Twitter @TJAnderson1.

“It’s Different This Time”

The four most dangerous words ever in explaining your investment and/or market position. Mostly made famous in justifying the “new valuation metrics” of the internet bubble during the second half of 1999 and early 2000. It didn't end well. I’ve been asked daily, and heard many others ponder whether the “tone of the market” is different this time during the selling we’ve seen to start 2015.

Let’s start with this: We had four periods of significant market weakness during 2014 and they all came in shorter intervals. The July selloff was 6 months after the shaky start we had in January 2014. Three months later the October “near correction” looked like it might be the real thing, but a sharp rally off the lows created the first V reversal on the way to new highs in November. Eight weeks later, we had a 2 week selloff following the new highs during the week of Thanksgiving.

Related Link: Notes From The Street: 'FLASHBACK....Oil Going To $200/Barrel'

Again, that was followed by a V reversal rally that took us to new highs December 29 on nearly all market averages, including the elusive Russell 2000. That rally lasted 8 trading sessions. 2015 started with a selloff Three Weeks after the mid December lows. I don’t have anywhere near enough formal math to get into Fibonacci patterns, but 6 months..3 months...8 weeks...3 weeks...clearly the selloffs keep coming at us in shorter and shorter intervals and eventually something's gotta give.

I'll go out on a limb and say, “Yes! this time it's different.” It just “feels” different.

Due to some degenerative changes to market structure and trade reporting the last decade, we can’t “read the tape” the way it was taught 30 years ago, but it’s certainly “feels” like CIOs at “Big Dough” shops are getting more defensive, rather than more aggressive in their investment posture. Look at the yield on the 10 year note. At 1.90% it’s been ratcheting lower for 8 weeks. Look at the High Beta “MoMo” stocks that provided the sexy outsized returns the last 2 years; Amazon.com, Inc. AMZN, Netflix, Inc. NFLX, Google Inc GOOG, Tesla Motors Inc TSLA, Keurig Green Mountain Inc GMCR, GoPro Inc GPRO and on and on….other than some Biotech names the “MoMo” stocks of the last 2 years seem to be desperately looking for a refueling station, or maybe some new age Dilithium Crystals.

We've logged 2 consecutive down weeks to start the year and without the emergence of new market leadership, it’s hard to see what will fuel the market to a new leg higher. No doubt, it's early in the year, early in the quarter, and we're not even half way through the month. 4Q earnings start this week with a vengeance this and there's enough variables in play that could become positive influencers, ie: significantly lower oil prices.

The Early Line: After a 4½% decline in Oil yesterday, Oil is down another 3% this morning. Equity futures are shrugging this off in early trading, projecting an 8 to 10 handle bounce in S&P 500 and a near triple digit gain in the DJIA. Wait!! Didn’t we do this yesterday? Many have been waiting for stock price direction to decouple from the decline in oil. Despite the early fail yesterday, we held the first hour lows very well, but faded at the end of the day. This morning stocks will again try to decouple from oil prices with the support from a strong rally in Asian Markets, and markets in the Eurozone 1%+ higher at midsession. If at first you don’t succeed……...

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