Market Direction: BEARISH alert
issued 11/23/2018
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No holiday cheer for the stock market this year.
U.S. stocks were giving back a chunk
of the previous day’s massive rally, which in turn was a snapback from the
worst Christmas Eve performance in history.
How
are benchmarks performing?
The Dow Jones Industrial Average DJIA, -2.37% dropped 440 points, or 1.9%,
to 22,439, while the S&P 500 SPX, -2.51% fell 47 points, or 1.9%, to
2,420. The Nasdaq Composite COMP, -3.12% was off 144 points, or 2.2%,
to 6,411.
On Wednesday, the Dow ended with a gain of 1,086.25
points, or 5%, at 22,878.45. The S&P 500 soared 5% to end at 2,467.70. The
Nasdaq rose 5.8% to 6,554.36.
The Dow’s rise marked its
largest-ever one-day point rise. On a percentage basis, all three major indexes
logged the strongest one-day gains since March 23, 2009, and it was the best
ever day-after-Christmas performance for the equity gauges. It comes on the
heels of a brutal selloff in a shortened Christmas Eve session Monday, which
featured the lowest closes for all three indexes since 2017.
What’s
driving the market?
Volatility looked set to stick with
the market, which tends to see quieter-than-normal volumes due to the Christmas
holidays. Stocks will see another break in trade next week when markets close
for New Year’s Day.
And while investors got an assurance
over Federal Reserve Chairman Jerome Powell’s job on Wednesday, there remains
no resolution to other big issues, such a continuing government shutdown as Washington tussles over funding for Trump’s proposed
border wall.
There was upbeat news for global
trade, with the U.S. expected to send a delegation to hold talks with Chinese
officials during the week of Jan. 7, according to Bloomberg News. It would mark the
first meeting since the G-20 summit in Argentina earlier this month, which
yielded a 90-day tariff truce.
However, trade optimism might be
tempered by a report from Reuters that the Trump administration is moving
closer to issuing an executive order in the new year that would ban U.S. companies from using telecommunications equipment
made by China’s Huawei 002502, -3.63% and ZTE 000063, +0.20%
What
are investors saying?
The lack of follow-through behind
Wednesday’s bounce underscored doubts around notions equities have put in a
bottom.
Heightened stock-market volatility
has complicated end-of-year tax-loss selling efforts, ensuring that such
harvesting is likely to continue through year-end, putting another cap on the
market, said Tom Martin, senior portfolio manager at Globalt, in a phone
interview. Tax-loss selling typically begins around November and is often
wrapped up by mid-December.
“While yesterday’s price action is
definitely a positive sign, it’s still too early to conclude whether the market
correction is over or more downside is yet to come,” said Hussein Sayed, market
strategist at FXTM, in a note.
“Such rallies are not uncommon in
troubled times, and we have experienced many of them in past bear markets. To
call for a bottom, we need at least a couple of days of strength, not just in
price, but also in trading volume, breadth of the market, and fundamentally
supported environment,” he said.
How
are other markets trading?
West Texas Intermediate crude prices
CLG9, -2.42% fell nearly 2% to $45.33 a barrel, after snapping back by 8% on Wednesday.
European stock markets reopened Thursday with losses after an extended
Christmas break.
In Asia, the Nikkei 225 index NIK, +3.88% soared 3.9%, though China’s
Shanghai Composite Index SHCOMP, -0.61% eased 0.6%.
The ICE Dollar Index DXY, -0.56% slipped 0.3%, while gold GCG9, +0.59% was firmer.
What’s
on the economic calendar?
The partial government shutdown
means investors won’t see a full economic calendar on Thursday. Weekly jobless
claims data were released, but November data on new home sales will be delayed
to another day. .
First-time claims for unemployment
benefits fell by 1,000 to 216,000 in the week ended Dec.
22, the Labor Department said Thursday. Economists polled by MarketWatch had
forecast a reading of 217,000.
The Conference Board said its consumer-confidence index dropped to 128.1 this month
from a revised 136.4 in November. Economists polled by MarketWatch had forecast
a 133.3 reading.
The all-time lows since our initial
recommendation to go SHORT
this market. Here is how the markets have performed:
Stock Market
Direction Recommendation (11/23/2018)
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Dow
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down 2,573.42 points a 10.60% gain
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12/26/18
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Nasdaq
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down 748.81 points a 10.79% gain
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12/24/18
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S&P 500
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down 285.98 points a 10.86% gain
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12/26/18
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Related Link: http://www.stockmarket-direction.com/
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