Summing Up January's Stocks Market

Extremely volatile, choppy, negative. These words or phrase, have been used by many, to characterize, the stock market, in January 2015. During January, the Dow, recorded numerous wild triple digit intraday swings, which may have been great for traders, but frightening for longer term investors, looking to put capital to work.

• Negative market sentiments of late December 2014, continued into the New Year.

Year 2014 was another year of gains for the markets. The Dow gained over 7%, the Nasdaq gained over 13% and the S&P 500 gained over 11%.

• During 2014, investors enjoyed the comfort of having the Fed. as a backstop to the stock market. As long as the Fed remained dovish, and interest rates keep at zero, markets kept grinding higher. However, once January rolled around, and investors realised, the Fed could begin, to raise interest rates, in July, the markets became overly skittish.

• Markets reacted violently, to the rapid collapse in the price of oil. The commodity has declined almost 50% in the last six months, taking down all energy related stocks. As investors try to weigh the benefits of lower oil, and gasolene prices, at the pump, for the consumer, and the negative impact, for US oil drillers, and producers. Talk of deflation began to creep into the daily dialogue, casting a negative tone over the markets. The markets tried to digest, whether spending by consumers, due to price reduction at the pump, would be enough to offset the disruption of low oil prices in the energy sector. That is still an unanswered question for markets today.

• The markets also had to grapple with with, what caused oil to fall so rapidly. Was it a supply driven or a demand driven event. Was it OPEC's failing to cut production? Was it US's now becoming 1 million barrel/day producer of oil? Is there an over supply of oil, globally? Or on the other hand, Was it a lack of demand for oil, caused by slowing economic growth China, India, Europe, Japan?

• Currency action was also a significantly player in the markets during January.

As the US Dollar continued to strengthen against other currencies, it also help to push down commodity prices, including oil.

• Markets also had to respond to the surprise currency action by the Swiss Central Bank, to remove it's cap on the swiss franc, allowing the curency to float freely, with the Euro.This action further strengthened the US Dollar, vs the Euro, and other currencies.

• Many other european and other countries took action, by lowered interest rates, to protect their own currencies. Leading to what many investors percieved as a currency war.

• The swiss action was taken in anticipation of the ECB chairman, Mario Draghi's announcement of ECB bond a buying program/QE, to boost weak Euro economies, scheduled to begin in March. A policy action, long expected by US investors. US markets did rally strong on the news.

• As the Fourth quarter earning season began investors looked to corporate performance, determine if, corporations, were being negatively or positively affected, by declining oil prices, and a strenghtening US dollar.

The markets severely punished companies that missed estimates, guided lower, blamed the strong dollar, or weak oil, for their problems.

• Companies that topped estimates were only, modestly rewarded. The only exception was iphone giant, Apple, who blew, even the most optimistic estimates, out of the water. And was handily rewarded by investors, who bid the shares up to the $120/share mark.

• With the most important half of the earning season, behind us, it has been a good one. Of all the companies reporting so far, 73% beat estimates, 8% have met estimates, and 19% have missed estimates.

• In summary, January was a month where the markets faced marked volatility and uncertainity, as investors globally, tried to gauge the negative effects of declining oil prices, currency and interest rate action, by many economies, and weakening growth pospects, for many countries, outside the United States.