Investors lack interest

Choppy market action of late has left investors with a lack of conviction. I discussed this further on and my expectations going into the last weeks of 2015 with Fred Katayama for Reuters Insider on 12/9/2015.
Investors were given just enough breathing room on Thursday to consider what a break below the 50 and 200 DMA would look like yesterday. We managed a meager gain relative to the carnage that has littered the landscape of recent trading sessions. The Dow Industrials (+0.47%), S&P 500 (+0.23%) and NASDAQ (+0.44%) all registered small gains on the day. The lack of meaningful gains after  a series of decidedly negative performances does speak to the likelihood of more pressure on the market. Another indicator of potential weakness in the offing was the decline of volume on the gains yesterday. Both the NYSE (-14.41%) and the NASDAQ (-10.75%) saw volume contract reflecting a lack of institutional conviction in any follow through higher in the near term. In short, we did not see a distribution day, but yesterdays trading gains were more a sign of continued weakness than of a rebound despite the fact that those gains marked a break in a streak of losing sessions that has lasted all week. From the early going it did appear as though we would see a significantly more robust rebound in pricing yesterday but after a strong start, markets meandered and faded into the closing bell.
Whatever limited upside bias equity markets did receive yesterday came from a tepid stabilization in crude WTI pricing. Crude managed to close the session at $36.76/bbl. Given the dramatic ground lost this week for crude, just a slowing in the deceleration of pricing for a session gave investors room to breath. Again, another factor, much like the price action and volume in equity trading yesterday, that may portent to further weakness. That relative stabilization in crude provided a context for out-performance by the energy sector (+1.07%).
Broadly speaking, the market’s modestly positive price action was well distributed. All major market sectors gained ground, save the Communications sector which shed 0.48%. Otherwise, Health Care (+0.85%) and Industrials (+0.75%) displayed leadership. As a result of the positive performances posted on a sector basis, it is fairly obvious that breadth, or internals, were also positive in that winners beat losers on both the NYSE and NASDAQ by a margin of 4-3 and 3-2 respectively.
The Weekly jobless Claims figures came in yesterday at 282K versus expectations that were calling for 270K. As expected, both Import Prices (-0.8%) and Import Prices (-0.3%) reflected continued contraction. In the case of imports, consensus was calling for a contraction of 0.4%. On a year-over-year basis, Import Prices have contracted an eye popping 10.5%.
Today’s Economic Calendar is limited to five data points; PPI-FD, Retail Sales, Business Inventories and Consumer Sentiment. We get the Baker-Hughes Rig Count data at 1:00 PM EST. It will reflect further contraction.
Equity markets are in the most compromised and vulnerable position they have been in, in months. Vigilance and caution is required.
flickr photo: wallyg