An active day in terms of volume, but not in terms of price movement. The major indices all finished with small losses: the Dow Industrials lost 6 points (-0.1%) to 10876, the S&P 500 fell 4 points (-0.3%) to 1267 and the Nasdaq dropped 8 points (-0.4%) to 2253. The Russell 2000 fell 2 points (-0.2%) to 683. The Dow Transports were down 0.1% and the Utilities index was flat. Bonds moved slightly higher, pushing yields down once again: the 5-year stands at 4.36% and the 10-year at 4.45%. The 2 and 3-year notes are at 4.35%.
Market internals leaned to the negative side, after starting out hot and steadily declining all throughout the day. Volume was very heavy, helped by expirations and index re-weighting. The NYSE was the better of the two exchanges, with both advance/declines and up/down volume about even. The Nasdaq looked much worse, with winners/losers at 7 to 8, but up/down volume about 3 to 7. New highs/lows were 134/93 on the NYSE and 101/56 on the Nasdaq.
Positive group movement was limited to the suddenly high-flying airlines (+3.5%) and gold & silver stocks (+1.3%). Losers were mainly from the energy sector: oil services (-2.2%), natural gas stocks (-1.9%), natural resources (-1.8%), oil stocks (-1.7%), biotechs (-1.2%) and chemicals (-1.1%).
Crude oil prices took a dive, falling $1.93 to $58.06/barrel. The dollar index fell 0.3% to 89.72, and gold held just above the $500 mark at $503/ounce.
BMB Note: I hear a lot of talk about how well the market is holding up, it just can’t sell off, blah, blah, blah. Yes, I know it still looks fine and it hasn’t broken down yet. But I simply don’t trust it - it looked great going into last January too. The Nasdaq is starting to look shakier every day. The market basically hasn’t gone anywhere in three weeks, and there’s only two weeks left in December - weeks in which trading volume will decline considerably. I’m willing to wait out those couple of weeks, and stand back to see what happens once January gets here. Then we’ll get to find out whether this year-end rally is for real or whether it has been “manufactured” for the third year in a row.
Maybe we can watch the VIX for clues. Last December, the VIX bottomed out at 11.14 on Dec. 23rd, then rose all the way to 13.29 by Dec. 31st, maybe hinting at the dive coming on Jan. 3. Today, the VIX bottomed at 10.15, a level not seen since July 20th.
