So much for the bounce. The end-of-day numbers don’t look like anything particularly bad, but there’s more to the story - we’ll cover that in the Note. The Dow Industrials gained 25 points (+0.2%) to 10883, but the broader indices were weaker: the S&P 500 fell 2 points (-0.2%) to 1264 and the Nasdaq dropped 11 points (-0.5%) to 2256. The Russell 2000 fell another 3 points (-0.4%) to 718. Both the Dow Transports and Utilities picked up 0.5%. Bonds yields fell, more so on the long end than the short, and the yield ‘curve’ doesn’t curve much anymore - at least it doesn’t curve up like it’s supposed to. We see the 6-month yielding 4.66%, 2-year 4.65%, 5-year 4.54%, 10-year 4.54% and the 30-year 4.64%. What a mess.
Market internals looked good early, but deteriorated all afternoon, and volume ticked up on the Nasdaq but down slightly on the NYSE. Advance/declines finished at just better than flat on the NYSE and about 4 to 5 on the Nasdaq. Up/down volume was just below even on the NYSE and just above the flat line on the Nasdaq. New highs/lows were 131/15 on the NYSE and 159/30 on the Nasdaq.
The group picture changed quite a bit from the morning, and more groups finished lower than higher. Leading the few winners were the gold & silver stocks (+1.6%) and the transports (+0.9%). On the losing side of the sheet were oil services (-2.9%), steel stocks (-2.0%), oil stocks (-1.9%), natural gas stocks (-1.9%), natural resources (-1.8%), computer hardware (-1.3%) and commodity stocks (-1.0%).
Energy prices were mixed, with crude oil up a few pennies to $62.65/barrel, while gasoline fell to $1.52/gallon and natural gas dropped to $7.48/mBTU. The dollar index lost a little ground to 90.25, and gold rebounded to $563/ounce.
BMB Note: It wasn’t today’s results that bothered me - it was the way it happened. At midday, the advance/decline line on the NYSE was about 7 to 3 - it finished just better than flat. On the Nasdaq, the A/D line was better than 3 to 2 - it finished negative. The Nasdaq was at 2284 - it lost nearly 30 points from that level. Early in the day, very few groups were lower - we finished with many more lower than higher. The market seemed to be quite willing to “sell the rally”.
BMB has been telling you to be cautious, and reiterates that recommendation here, maybe with a little more emphasis. This market is not in great shape, former market leaders are breaking down, and there are very few areas to hide. Manage your positions, and honor your stops — and if you absolutely have to test the long side, consider utilizing smaller positions and tighter stops. Preservation of capital is the main priority. Traders should continue to look for transitional shorts.
