For investors, it may be a case of nowhere to run, nowhere to hide.
So says CNBC’s “Mad Money” host Jim Cramer, who warned Monday of a very “serious correction” in a day that saw the Dow skid 600 points on a retreat for oil and a firmer dollar, and mega-stock Apple AAPL, -5.04% (TICKER: AAPL) got the cheese touch
But while dip-buying appetite appears to have stirred a bit in the wake of that action, note that oil is under pressure again as investors entertaining the possibility that October’s volatility was not a one-off.
Echoes of that last bit can be found in our call of the day, from Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, who advises a cautious approach because he doesn’t think stocks have touched bottom.
“We remain bearish, as investor positioning does not yet signal ‘The Big Low’ in asset markets,” says Hartnett, in the bank’s closely watched November fund manager survey (the capitalization isn’t lost on us, nor Wall Street, we presume).
For one, the bank’s Bull & Bear indicator, which tracks investor sentiment is hanging around 3.1, meaning no “contrarian buy signal” is being flagged, he says. The gauge runs from 0 to 10, with the high end representing extreme bullishness and the low end extreme bearishness.
Managers surveyed believe the peak of this bull run is not here yet, with 12% upside seen from current levels, taking the S&P 500 to 3,056 (weighed average). That said, one of three respondents said they think the market has already peaked.
The survey also showed that U.S. markets were once again the most favored equity region, with allocation climbing 14 percentage points to a net overweight of 14%. Cash levels also dropped in November to 4.7% from 5.1%, meaning investors bought into that October correction, upping exposure to U.S. and emerging-markets stocks, REITs and health care, which is now the No. 1 overweight, in the survey.
And in a surprise to few, allocation to global techs fell out of bed, with just a net 18% of managers saying they’re overweight the sector.
Still, a long position on FAANG stocks (Facebook FB, -2.35% , Amazon AMZN, -4.41% , AAPL, -5.04% Netflix NFLX, -3.10% and Alphabet’s GOOGL, -2.57% Google) remained the most crowded trade for those fund managers, closely followed by short U.S. Treasurys.
The market
Dow YMZ8, +0.50% S&P 500 ESZ8, +0.60% and Nasdaq NQZ8, +0.82% futures are pointing to a rebound after Monday’s beatdown for the Dow DJIA, -2.32% S&P SPX, -1.97% and Nasdaq COMP, -2.78%
Check out the Market Snapshot column for the latest action.
Crude US:CLU8 is down again, keeping up a historic skid, and the dollar DXY, -0.31% is steady, as the pound GBPUSD, +0.8015% gets a bump from data. Gold US:GCU8 is under some pressure.
Read: Oil futures just did something never done before, as Trump calls for lower crude prices
European stocks SXXP, +0.44% were little moved, China’s SHCOMP, +0.93% stocks rose, but the Nikkei NIK, -2.06% tumbled 2%. And Apple suppliers in Asia did not go unpunished for Monday’s action.
The chart
How low can crude go? Lower, says our chart of the day, which shows the commodity moving another leg south late Monday into Tuesday.
MarketWatch
How low?
Of course some saw this coming all along:
People are freaking out about drop in oil prices like no one saw this coming.
I've saying every Weds that WTI & Brent were WAY over-valued w/ mid-cycle prices of $60 & $65 respectively. Market is now regressing that mean.#OOTT #oilandgas #oil #WTI #CrudeOil #fintwit #OPEC pic.twitter.com/espFgQIVd4
— Art Berman (@aeberman12) November 13, 2018
Read: OPEC report shows output from Russia cartel offsets loss from Iranian sanctions
The buzz
Home Depot HD, -3.53% is up on results, whiles Tyson Foods TSN, -0.76% is getting clobbered by a sales miss. Pot stock Tilray TLRY, +4.08% is due after the close.
Amazon AMZN, -4.41% is ready to pick New York City and Northern Virginia for its second and third headquarters, in a decision expected Tuesday, ending a more-than-yearlong public contest that started with 238 candidates.
Boeing BA, -3.33% wasn’t forthcoming about potential hazards linked to a new flight-control feature suspected in last month’s deadly Lion Air jet crash, say safety experts close to the investigation.
As the death toll climbs to 42 from ongoing California wildfires, and POTUS OKs disaster money, insurers such as AIG AIG, -3.08% and Chubb CB, -3.03% are racing to dispatch their own wildfire crews.
Treasury Secretary Steven Mnuchin has restarted talks with Chinese counterpart, Vice Premier Liu He, to hammer out a deal that to ease trade friction ahead a G-20 summit in Buenos Aires.
Germany’s Bayer BAYN, +0.04% has revealed a fresh batch of lawsuits related to recently acquired weed killer Foundup.
On the data front, an index of small business sentiment showed an October slump.
Read: Two U.S. senators call on Trump to lay off Fed Chairman Jerome Powell.
Did Saudi Crown Prince Mohammed Bin Salman really have no clue about Jamal Khashoggi’s assassination? Citing three people who have heard the Turkish intelligence recording, the New York Times reports that a member of the kill team told a superior to “tell your boss,” believed to be the Saudi royal.
Random reads
NYT reporter’s tweetstorm tells of “badass nurse” who drove through flames in California.
All the love and money pouring in for California’s fire-displaced animals.
On-the-road hanky-panky? Thank the robots for that.
The latest internet challenge: Your stupidest joke ever.
Mistaking the German chancellor for France’s first lady is an honest mistake if you’re 101
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.
Follow MarketWatch on Twitter, Instagram, Facebook.
Providing critical information for the U.S. trading day. Subscribe to MarketWatch's free Need to Know newsletter. Sign up here.
