Ending the Trading Week on a Sour Note

Ending the Trading Week on a Sour NoteThursday recap:  Major market averages put a halt to their 3 day losing streak, but it felt like they were saved by the bell in doing so.

For most of the day investors and traders were undeterred by Thursday’s sharp midday reversal, and seemed to be less concerned with Oil failing to even attempt a move on its recently established $38 – $40 resistance level.

The last 90 minutes, however, felt like the rest of the week as the buying looked exhausted and the sellers stopped waiting for higher prices.  

Ending the Trading Week on a Sour Note

It did not leave us with a very positive outlook for Friday, as the issue of sub $40 oil won’t go away, and we brace ourselves for 2½ days of nonstop banter on the meaning and impact of an initial interest rate hike, after which rates will still be very near historical all time lows.  Let’s take a closer look.

The S&P 500, +0.2% at 2052.23  gave up 15 handles in the last 75 minutes of trading. It may still looks good, 9% higher than the late August and September lows,  but by the end of the day had barely budged off Thursday’s close, the third lowest close in the last 6 weeks.

If the S&P 500 fails to hold 2045, the really key level it 2020, which marked both the mid September high and the mid November lows.

Ending the Trading Week on a Sour Note

The NASDAQ, +0.45% at 5045.17 is 2 days into “golden cross” with the 50 day MA close to 20 points above the 200 day MA for the first time since September 25th.  Investors are hoping this has much better predictive results than when the  “death cross” in late September.

The NASDAQ went “death cross” on September 28, 1 day before the September 29 low of 4517, after which the NASDAQ rallied +13% the following 5 weeks.

The DJIA, +0.5% at 17,575 has made up a lot of its relative under-performance from earlier in the year.  Stellar performance from MCD, GE and NKE, and the DOW -DD mega merger have certainly helped as has the US $$ cooling off a bit in the last week.  The chart looks like a carbon copy of the S&P 500 and each have their own “golden cross” pending for what looks like next week.

The Russell 2000, +0.3% at 1149 continues to be the problem child.  After the 3% beat by the Russell v S&P500 in November there was hope it would continue to revert from its relative under performance since mid year. Unfortunately that 3% bump from November was reversed 5 days into this month, and the slide in the Russell has continued since then.

Ending the Trading Week on a Sour Note

The Russell  is barely hanging on to the 1150 level, just slightly higher than the midpoint between the late September lows and the November highs.

The Early Line for the Stock Market Today:

Stock index futures are down decidedly in very early trading with the DJIA look at a triple digit decline and the S&P 500 setting up to start the day 15 to 20 handles lower. Broad market averages will certainly test support level from the last 6 to 8 week in the first hour of trading.

Watch support levels of DJIA  at 17,250, S&P500 at  2020, and NASDAQ at  5000 as a key line of defense if the morning declines extend beyond 1%.

There are a number of factors contributing to the weakness.

Obviously Oil is front and center, and it is 1% lower again this morning.

Ending the Trading Week on a Sour Note

The Chinese Yuan is back in the news, having its worst week since the August devaluation.  Today the Yuan closed just less than 6.5 to the US $$.

Eurozone markets are consistently lower across the Continent.

We’ll get key economic data points this morning on the US Economy: Retail Sales and Durable Goods at 8:30 AM followed by University of Michigan consumer confidence for December at 10:00 AM

Ending the Trading Week on a Sour Note

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