Human beings and fear go back a long way.
It's an ancient survival mechanism, passed down through the generations, as our cave-dwelling ancestors contended with wild animals, natural disasters and each other.
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The right kind of fear can keep you alive, but the wrong kind can keep you from making a move.
“It's only natural,” said TheStreet Pro's Stephen Guilfoyle. “Fear of the dark. Fear of the unknown. Fear of the known. You still do what you have to.”
Guilfoyle, whose trading career dates back to the floor of the New York Stock Exchange of the 1980s, in a recent column considered a certain kind of fear — where you're moving through an unfamiliar environment and you get a feeling you may have company.
“Maybe a big cat or something predatory might be tracking you,” he said. “That realization always makes the hairs on the back of my neck stand up. I call that the ‘nasties.'”
Jobs numbers rattle markets
The stock market can be a source of the nasties when the numbers start heading into the red, as they have been lately.
And it's not the big cats you have to worry about in this jungle. It's the bears.
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Stocks were tumbling at last check on Aug. 1 on signs of a weakening economy.
The Bureau of Labor Statistics said that just 73,000 jobs were created in July, causing the unemployment rate to tick up to 4.2% from 4.1% in June.
President Donald Trump promptly fired BLS Commissioner Erika McEntarfer, accusing her being a political appointee who was manipulating jobs data, CNBC reported.
“We need accurate Jobs Numbers. I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY,” Trump said on his Truth Social platform. “She will be replaced with someone much more competent and qualified.”
Trump also took another shot at the Federal Reserve chairman, saying that “Jerome ‘Too Late’ Powell should also be put ‘out to pasture.’”
Guilfoyle noted that things went bad on July 31 half an hour after the opening bell and “got uglier around lunchtime and uglier still going into the final hour of play.”
While Meta Platforms (META) and Microsoft (MSFT) rallied, Guilfoyle noted that the “joy” was put to the test early as the Bureau of Economic Analysis posted its July data for personal income and outlays as well as July consumer-level inflation.
“Just a day after the quarterly data for inflation had put traders and investors at ease, the monthly data did just the opposite,” he said. “Like a jaguar in the shadows, hard to see, watching from just far enough to raise those hairs on the back of your neck.”
Veteran trader warns about market conditions
He said Trump “put the whammy on ‘big pharma,' sending letters to 17 leading drugmakers and demanding that these firms take steps to lower prices in the U.S. They have 60 days to get on board with his “most favored nation drug policy.”
Trump also signed an executive order revising tariffs on many nations that had failed to reach new trade deals with the U.S.
Related: Warren Buffett sends White House blunt message on the economy
“One must remember that while it may not look that ugly at the major index level, the selling was nearly constant on Thursday and markets sold off from an upward burst early on,” Guilfoyle said.
Eight of the 11 S&P sector SPDR ETFs closed in the red on July 31, and Guilfoyle, known on Wall Street as Sarge, called upon his military experience to explain what happens next.
“So, this is where we realize that we may be up against something,” he said. “This is where you stop moving, get low, unsnap your Ka-bar and switch your weapon off of ‘safe.'” (The Ka-bar is a combat knife.)
Losers beat winners by almost 3 to 2 on the New York Stock Exchange and by almost 2 to 1 on the Nasdaq, Guilfoyle said
Advancing volume took just a 32.9% share of composite NYSE-listed trade and a 36.1% share of Nasdaq-listed trade, he added. More important, “aggregate trading volume increased across the listings at both the NYSE and Nasdaq as well as across the membership of the S&P 500.”
“Gang, you know what that means, right?” he asked. “Thursday qualifies as a potential ‘Day One' bearish reversal.”
He said that a large selloff on Aug. 1 would be seen as a continuation of Day 1 and that “we actually need to see a break or pause in between any Day 1 and any Day of Confirmation.” (FYI: The S&P 500 finished Aug. 1 down 1.6%.)
“Can anything help? Can anything make it worse?” he asked. “The algorithms that control the point of sale stand ready to overreact, force momentum overshoot and create market inefficiency.”
“You know that as this is what they are designed to do, so keep your helmet on and buckle your chinstrap,” Guilfoyle added.
Related: Veteran fund manager who forecast S&P 500 crash unveils surprising update
