Tuesday Recap: US Major Stock Market Averages settled with a mixed performance Tuesday, although market internals showed further deterioration. What do I mean by market deterioration?
We’ve now had 4 straight days with at least 700 stocks with new 52 week lows. That’s an amazing streak!
The DJIA, +0.2% at 16,012 and S&P 500, +0.05% at 1881.33 eked out fractional gains in a bit of a roller coaster session that saw the S&P 500 trade in a 25 handle range. The good news is, for the second day in a row, the S&P 500 tested the August 25 closing low of 1867 on an intraday basis, and managed to stage a 15 handle recovery off the 2:00 pm lows. (see chart below)
In very early trading this morning The S&P 500 is well through the 1867 level to the downside, following the market route in Asia and steep declines in Europe to start the day.
Stock Market Action Takes 1 Step Forward-3 Steps Back
The NASDAQ, -0.25% at 4476.95 settled fractionally lower despite moderate gains from the FANG gang, highlighted by a +3.5% gain from NFLX, to $107.89 which rallied on cue, right off its 200 day moving average of $102.80.
NFLX did report earnings after the close, and initial reviews were positive as it tacked on another 4%, trading around the $112 level shortly before 5:00 PM. We’ll see how resilient those gains are after a sharply lower opening later this morning.
The Russell 2000, -1.35 at 994.87, just showed no fortitude at all, failing to regain the 1000 level during the rally from 2:00 pm to 3:30 pm, settling at its lowest mark since June of 2013.
No doubt the Russell is very oversold s/t at 12.5% below its 50 day moving average and 16.7% below its 200 day MA, but obviously not cheap enough yet to attract meaningful buy interest.
There has been plenty of banter in the market the last 2 weeks surrounding whether we are in a healthy correction or the beginning of a more damaging cyclical bear market. If anyone wants a great visual of what a bear market looks like check out a 2 year chart of the Russell 2000, or a longer chart of the DJ Transports.
Stock Market Internals continue to be the Big Ugly.
Tuesday advancing issues trailed decliners by 2 to 1, in a market that was basically flat. Contrast that to last Thursday when we had 1½% gains across the board and adv/decl stats could do no better than positive 2 to 1.
It’s not a pretty picture.
We also had 704 new 52 week lows yesterday. That’s 4 straight days with at least 700 new 52 week lows!!!!
Somebody please tell me the last time that happened.
The Early Line: Today’s market is going to be dominated by?……………….You guessed it…….Oil, with both Brent Crude and WTI trading below $28 …..and also the stock market route in Asia…
In Japan the Nikkei and Topix Market averages both fell -3.75%.
The Hang Seng Market Averages lost 4%+ in Hong Kong.
Nikkei, Hang Seng lead slump in Asia markets – CNBC https://t.co/5Rc2Wt9rCA [G]
— live_china (@live_china) January 20, 2016
In China where the Shanghai Composite declined another 1% to bring losses on the month to -17%. I haven’t seen “reliable sources” cite intervention by Chinese Finance Authorities to buffer the decline, but given the disparity with the rest of Asia, it’s very likely.
In the US we’re looking at 2% declines for the DJIA and S&P 500 to start the day. That would put the S&P 500 well below the August 25 closing low of 1867, and closing low of 1862.49 from October 15, 2014.
The S&P 500's crash will look like this https://t.co/5eaMgOv0PC
— TheStreet (@TheStreet) January 20, 2016
Note that in October 2014, the market rallied sharply off intraday lows on both October 15 and 16, and the intraday low on October 15 was all the way down at 1820.66. Full Disclosure: I stay away from intraday levels with the exception of major reversal points and October 15 and 16 2014 definitely fits that bill.
Did I mention we’ve had 4 days in a row with 700+ new 52 Week Lows?