Markets opened up, quickly sold off on weak data, and then rallied in the last 90 minutes as oil bounced. In the end the two major indexes finished mixed with the S&P 500 tacking on 0.50% while the NASDAQ fell 0.28%. We’ve seen weakness in non automotive manufacturing for a good year – now it might be starting to bleed into the services sector:
The ISM non-manufacturing index January reading came in at 53.5, below the expected 55.1. It is also the lowest reading since December 2013. Any reading below 50 indicates contraction. “The lions share of the U.S. economy is services,” Randy Frederick, managing director of trading and derivatives at Charles Schwab, said ahead of the data release. “If we see a slump in [ISM], we’re going to see a sell-off in the market.”
The S&P 500 stayed over 1900 and that lower blue trend line so they have that going for them – and not that much else. The NASDAQ continues to struggle.
We’ve been talking about the danger of the Russell 2000 falling ot of the bottom of this “bear flag”. That happened intraday but the late day rally pushed the Russell back into its flag. Still something to monitor daily.
Generally when the NYSE McClellan Oscillator is positive and stays positive for a number of days it is time to be bullish but it is not being confirmed in the index charts at this point.
Pretty shocking to see 10 year yields touch 1.80% earlier today! You also saw a spike in the dollar as the weak data have many thinking the Fed no longer is doing 4 rate hikes in 2016. For the record I stated quite a few times I thought that was fanciful to believe.
Oil bounced sharply on some comments out of Russia. Doesn’t change anything at this point as it still remains in downtrend.
Oil initially rose on news that Russia may be open to a deal with OPEC in order to cut production.
If you remember this was the same “news” that led to a rally about a week and a half ago.
Ugly reversal in Google (GOOG) – their search chief is quitting.
Amazon.com (AMZN) closed below its 200 day moving average.
Shares of Yahoo! (YHOO) dropped 4.8% after the Internet services company late Tuesday reported a loss for the fourth quarter.
Comcast (CMCSA) gained 6% after the company reported increased revenue.
Reader request for XLE – the ETF for energy. Still in a downtrend. Really the only time to be a bull in it was last October when it broke a downtrend early in the month (marked with an arrow) but even that breakout was a struggle. But you had 2 months of “not losing money” as the ETF went sideways, and at this point not losing money in the energy sector is a win. It then fell over and has been in downtrend since. A move over $60 would put it in a similar situation to early October 2015 where someone who buys a reverse of trend can give it a try.