Wednesday, January 20, 2016, 12:31 P.M., EST
The S&P 500 has taken out its August/September lows, as US stocks search for buyers. The Dow has fallen down by more than 525 points and all S&P sectors are lower by more than 2.8%. Oil’s barrel price has fallen below $27, thus pelting energy stocks (-4.2%). Shares traded are elevated across the board, with volume more than 60% higher than normal. DOW -3.3%, S&P 500 -3.1%, Nasdaq 3.4%, Russell 3.2%
- The cold weather and pending snow storm in the northeast hasn’t stirred oil demand chatter to possible shakeout the oversupply concerns. US inventories rose by 2.75 million barrels last week, pushing the price per barrel to a 12 year low. From the Wall Street Journal, “John Kosar, director of research at technical analysis firm Asbury Research, is keeping an eye on the astoundingly tight correlation in recent weeks between the spot prices for West Texas Intermediate and the S&P 500. His simple correlation calculation shows a 0.92 correlation between the two in January (a reading of 0 indicates stocks are moving with no relationship, while 1 means gains or losses in perfect unison). Kosar told our colleagues at Barron’s that he ran the numbers back two decades and couldn’t find another period where the correlation exceeded 0.7”
- Despite the more than 9% decline we’ve seen in 2016, investors have attempted to boost stocks out of the gate, as the markets have opened higher 7 out the 12 trading sessions this year. The bears typically take over around midday, and prices spiral lower into the closing bell.
Technical Take
As of 11:00 AM EST, Nasdaq Composite:
- Advancers: 186
- Decliners: 2122
- Advance Volume: 8MM shares
- Decline Volume: 171MM shares
- New 52 week Highs (prior close): 10
- New 52 week Lows (prior close): 481
Oil and equities continue their mutual collapse, gaining momentum to the downside. Key supports are being testing on the major equity indices today after a straight 13% decline over about 3 weeks without any bounce; oversold continues to get more oversold. Once again we would cite that bull markets do not behave this way. Small caps and transports as leading indicators to the downside show no signs of moderation. Perhaps markets need to see a capitulation style selling panic in coming days (hopefully) as investors only begin to see earnings results/ guidance.
- On at least an intraday basis the S&P 500 Index (SPX) has careened through important support in the 1860 – 1870 area congruent with September and August lows. Now officially seeing a lower low, most technicians wouldn’t argue that bear market is a fair descriptor of the current market status. Some may call upon 1820, the April and October 2014 lows as the next major support zone where a countertrend rally may be born.
- The Nasdaq Composite Index (CCMP) is barreling haphazardly toward its next support represented by the opening and intraday flash crash lows from 8/24 of 4350 and 4290 respectively with 4350 being the more important of the two. At the same time the CCMP has been displaying relative weakness against the SPX since 12/8 per the negatively sloped line in the bottom panel of today’s chart, reinforcing the risk-off sentiment. In the panel above that we see RSI remains in oversold territory as equities have seemingly lost their elasticity and investors are no longer eager to ‘buy the dips’. 4130, the October 2014 lows are the next support.
The Nasdaq's Market Intelligence Desk (MID) Team includes:
Michael Sokoll, CFA is a Senior Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over 25 years of equity market experience. In this role, he manages a team of professionals responsible for providing NASDAQ-listed companies with real-time trading analysis and objective market information.
Jeffrey LaRocque is a Director on the Market Intelligence Desk (MID) at Nasdaq, covering U.S. equities with over 10 years of experience having learned market structure while working on institutional trading desks and as a stock surveillance analyst. Jeff's diverse professional knowledge includes IPOs, Technical Analysis and Options Trading.
Vincent Randazzo, CMT is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over 13 years of experience in equity markets having served in equity research sales and desk analyst roles at major banks. Vincent’s specific expertise is in technical analysis and has been a Chartered Market Technician (CMT) since 2007.
Steven Brown is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over twenty years of experience in equities. With a focus on client retention he currently covers the Financial, Energy and Media sectors.
Christopher Dearborn is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Chris has over two decades of equity market experience including floor and screen based trading, corporate access, IPOs and asset allocation. Chris is responsible for providing timely, accurate and objective market and trading-related information to Nasdaq-listed companies.
Annie O'Callaghan is Director on the Market Intelligence Desk (MID) at Nasdaq. Annie has worked for NASDAQ in a variety of roles including support of Nasdaq C-level management in client retention and customer service. Annie also served as a Sales Director in Nasdaq’s Transactions Services business. Prior to joining Nasdaq, Annie worked at AX Trading, managing accounts for its Alternative Trading System and served on Credit Suisse's trading desk as an Electronic & Algorithmic Sales Trading Analyst.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
