Stock Market Produces Another Wild Wednesday

What is it with the stock market and Wednesdays?

Two weeks ago stocks had a “near capitulation” day as the S&P 500 put in an intraday low of 1812, just a few ticks below the intraday lows from mid October 2014.

 Stock Market Produces Another Wild Wednesday

In a flashback to those 2 days 15 months ago, the S&P 500 then rallied over 45 handles to close at 1859, a mere 3 points below the back to back close at 1862 from mid October 2014.

We called it tie.

Yesterday stocks went on another wild ride as stocks, oil, currencies and pretty much any actively traded asset acted like a ride on “The Zipper” at the amusement park.  There were so many moving parts and so much debris flying in every direction I doubt my namesake from “The Matrix” could have come away unscathed on one of his better days.

 Stock Market Produces Another Wild Wednesday

Here’s just a few highlights:

Stock Market Produces Another Wild Wednesday…

How Can it only be Thursday?  There was at least a week’s worth of action Wednesday as stocks twice testing the intraday lows from last week, not to mention the nerves and fortitude of investors and traders.   

The DJIA was clearly the out performer, which to me signals a flight to both Quality and Yield from Big Dough Investors with dedicated equity money.

The Electric Utilities certainly confirm the flight to yield, with the DJ Utility average +6.5% YTD.

Oil was again a major story (excuse the broken record), and holding the $30 level was a key ingredient to the market’s resilience.  Oil not only held $30 on a sharp plunge following after the EIA inventory report at 10:30 am, but shot off it with turbochargers to finish with an 8% gain on the day.

The first half of the bounce in Oil looked purely technical, and then of course we had a “rewind, play” of the convenient rumors from last week of Production cuts among OPEC and others  (read Russia). The hilarity of yesterday’s rumor was that the talks are to be brokered by Venezuela!!!  Please!!  Spare the keystrokes next time and send the Venezuelans a few loaf of bread.

 Stock Market Produces Another Wild Wednesday

FX traders were not to be left out of the party as currency markets from Japan to Europe the US had outsized volatility, reversing and then some the big moves from last Friday.

It seems the BOJ was again the trigger point as  they “clarified their move to negative interest rates (NIRP) by capping the percentage of paper they will allow to go negative.  Keep in mind that Japan has been throwing “Easy Monetary Policy” at their economy for 25 years and it hasn’t worked yet.

The Yen is higher than it was before they announced the move to NIRP last Friday.  Maybe it doesn’t translate well in their culture, but we have a very clear definition for “doing the same thing over and over and over again and expecting a different result” I’m sure I’ll think of it after I shake off the early morning ADD.

 Stock Market Produces Another Wild Wednesday

The US 10 year Note traded below a 1.9% yield for the first time in…..close to a year?  The catalyst here was the ISM non-manufacturing report coming in with a 52 handle, 4 notches down from last month. Fed Funds Futures quickly went to a level reflecting better than 50/50 odds that there will be zero interest rate hikes this year.   Always a fluid situation, but clearly a sharp contrast from where we here 6 weeks ago.

Today, we’ll start with a minor pullback in Oil, certainly deserved after an 8% move yesterday. It would be a positive sign if stocks could separate from Oil for more than a cup of coffee.   Stay Tuned!!

Tomorrow we’ll get the January NFP and employment report, always a focal point for FED watchers and Economists, although without the drama we’ve seen in years past.  If it’s not a big outlier from consensus of +175,000 the reaction will likely be muted.

Insanity!!     That’s it……..Insanity!!   I knew it would come to me.

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bob Reply

Pete off my 15-year monthly –CVX–XOM–has not yet turned up on RSI–MACD–very important I see evidence of some turn –thoughts–macro picture down to micro chart–

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