Late Day Recovery Pares Stock Market Losses

US Equities could not escape the mark down in stock prices across the Globe that rang in day 1 of the New Year. In a flashback to last summer, the angst began and was most pronounced in China where The Shanghai and Szechzen markets declined 7% and 8.2% respectively.

Tensions between Saudi Arabia and Iran was the clear catalyst for a wild ride in crude oil which traded between +3%  and flat at least a couple times between early Sunday morning and Monday’s close.

Late Day Recovery Pares Stock Market Losses

Oil was on a roller coaster ride for the better part of 24 hours until ending the day fractionally lower.

Oil shares fared slightly better than the commodity, and much better than the broad market.  The beaten up Oil Service sector finished with gains of better than 1%, and while the buying was no doubt selective, it was notable that select names in the oil space and a half dozen retailers were just about the only things “green on the screen” before the late day recovery.

Late Day Recovery Pares Stock Market Losses

NASDAQ; -2% at 4902, posted its lowest close since October 21.  It could have been much worse, without the 1% rally off the lows of the day in the last 30 minutes of trading.  Many of the best performing stocks from last year were the sessions biggest losers.  It clear right out of the starting gate that the Bears had their FANGs out for uber momo, high beta names that had outsized gains last year.

FB -2.3%;  AMZN -5.7%; NFLX -3.8% and GOOG -2.2%  all had at least 4% to 7% losses during the first half of the day.

Late Day Recovery Pares Stock Market Losses

Why Such a dramatic shift in investor sentiment in stocks with triple digit P/e valuations?  While nothing fundamentally changed over the New Year’s weekend, it’s very likely that investors with gains of anywhere from 50% to 300% the last few years were waiting for the new year to sell, thus avoiding a taxable gain in 2015.

The Russell 2000; -2.4% at 1108.62,  posted its lowest close in just over 3 months but did manage to hold the crucial 1100 level, a benchmark it has closed below only 3 times since the October 2014 correction.   You could argue the last 3 days of declines has the Russell in a s/t oversold state, 4.7% below its 50 day and 8% below its 200 day moving averages.

Late Day Recovery Pares Stock Market Losses

If the 1100 level doesn’t hold, the next level of support is the October 2014 closing low of 1049.30.

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