Last Week Stocks “SeeSawed” Then Dove Deep Into The Red

Last Week Stocks “SeeSawed” Then Dove Deep Into The Red

Stocks dove across all 10 sectors in the heaviest trading of the year Friday as Quad Witching’s options and futures bets were settled.

The Bearish action gave the market its 2nd biggest daily loss in a row, pushing the indexes South on the week.

Financial sector fell the most.

Tech sector shares suffered more declines as a bad December got worse for Apple (NASDAQ:AAPL) bringing its MTD loss to 10%.

Overseas, Japan’s market sank after that country’s central bank made changes to a stimulus program that fell short of what investors hoped.

Another fall in energy prices sent Oil stocks lower, and worries about weak global growth weighed on shipping and other transportation companies.

The DJIA fell 367.29 pts, or 2.1%, to 17,128.55.

The S&P 500 index fell 36.34 pts, or 1.8%, to 2,005.55.

The NAS Comp sank 79.47 pts, or 1.6%, to 4,923.08.

US stock trading was even more volatile than usual Friday because of the simultaneous expiration of futures and options that investors use to place bets on indexes and individual stocks, it was Quad Witching Day. As a result Friday was the busiest trading day of the year for stocks.

The market ended a seesaw week lower.

Stocks rallied over the 1st 3 days and spiked Wednesday after the Fed raised interest rates for the 1st time in almost 10 years. The over the next 2 days stocks were hit by the worries that have dogged them all year, like weakness in the Chinese economy, slowing global growth, and skidding prices for energy and metals. Plus technically there was no break out North on the 34th attempt.

The global market went into a similar decline 2 weeks ago, when the ECB ramped up its QE style stimulus but did not do as much as expected. Stocks rallied after ECB President Draghi said the bank is ready to expand its stimulus program further if needed.

Investors are on the lookout for continued easy money from the central banks.

The Federal Reserve had kept interest rates at Zero+ for 7 years.

Fed Chairwoman Janet Yellen emphasized that despite the boost, interest rates will remain low for some time putting Bearish pressure on bank stocks.

Expect a dead cat bounce this week, some may call it a Santa Claus Rally, not so. Tune out the noise.

  • NAS Comp +4.0% YTD
  • S&P 500 -2.6% YTD
  • DJIA -3.9% YTD
  • Russell 2000 -6.8% YTD
HeffX-LTN Analysis for DIA:  Overall Short Intermediate Long
Neutral (-0.19) Bearish (-0.40) Neutral (-0.12) Neutral (-0.03)
HeffX-LTN Analysis for SPY:  Overall Short Intermediate Long
Neutral (-0.07) Neutral (-0.20) Bearish (-0.31) Bullish (0.31)
HeffX-LTN Analysis for QQQ:  Overall Short Intermediate Long
Neutral (-0.06) Bearish (-0.49) Neutral (0.06) Bullish (0.25)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Neutral (0.23) Bullish (0.31) Bullish (0.40) Neutral (-0.01)

Have a terrific weekend.

Paul Ebeling

West Brook Radio

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