Monday’s market was marginal through most of the day, but all major indices ended the day in positive territory, led by the Nasdaq.  It was the market’s third positive close in a row and the fourth in the last five days. The S&P 500 ended the day at 1799.84, less than 3% from its all-time closing high of 1844.46.  It is now nearly 60 points above its recent low on February 3 (about a 6% drop from its high). 

Stocks provided a volatile and sweat-inducing ride last week in what many investors and traders thought might be the big selloff that so many have been predicting. Although the market tends to follow a path that fools the greatest number of people, sometimes it behaves in a self-fulfilling prophesy.

Today, the market continued its tortuous path of the last two weeks, falling sharply virtually the entire day with the DJI ending down 326 points, the S&P 500 down 2.3% (it’s worst day since June 20, 2013), and the NASDAQ down 2.6%.  We are now down about 6% from the S&P 500’s high on January 15.  A drop of 10% is generally thought of as correction, so we have another 4% or so to fall. 

Stocks continued last week to seek some firmer footing, as prices found some support and volatility hit some resistance, and a flight to safety of global capital benefited long-term Treasury bonds -- the very assets that are supposed to be selling off in a secular “Great Rotation” into equities.

This week could be very telling in what to expect from the markets in the first quarter and the rest of 2014 as a number of important companies report Q4 and 2013 year-end earnings. Today brought in some stock moving releases from Caterpillar Inc. (CAT), Apple Inc. (AAPL), Seagate Technology (STX).

CAT reported better-than-expected earnings before the market opened along with a $10 billion buyback program. 

There is no sugar-coating what happened to stocks on Friday. All around the world, stocks really took it on the chin as the usual support mechanisms that bulls have enjoyed failed to materialize. The S&P 500 sliced through firm support at 1800 on high volume like it wasn’t even there. But market participants had become convinced that a long-overdue correction was imminent, so they quite simply were looking for a reason to sell.

David Brown is on a speaking tour on behalf of  the Baker's Dozen Unit Investment Trust (UIT).  Publication of "What the Market Wants" will resume next week.

Stocks continue to trade in a sideways technical consolidation just below their highs. With the start of earnings season underway, investors appear to be looking for a catalyst for some renewed buying that can launch a bullish breakout.

The first full week of the New Year was uneventful. There seems to be some trepidation among U.S. equity investors after such a strong finish to 2013. On Friday, the jobs report was disappointing, but investors quickly shook it off as nothing more than an anomaly given the prior trends and closed the week on a high note. Among the business sectors, the big winner last week was Healthcare, but Technology also showed signs of life.

Despite a positive Factory Orders report of 1.8% compared to an expected 1.6% and last month’s drop of 0.5%, the market opened up briefly; however, light volume gave way to selling pressure caused by a slightly negative ISM Services Report of 53.0, less than last month’s 53.9 and an expected 54.8 reading. All major markets closed slightly lower, making for the third consecutive low-volume, negative market day to open 2014.