Another Brutal Close

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Posted: Oct 12, 2021 12:52 PM
Another Brutal Close

Source: AP Photo/Seth Wenig, File

Ouch! Yesterday’s session gave me flashbacks to the heavyweight championship on Saturday. After getting hit hard early and looking to be out for the count, major indices turned nicely, led by the NASDAQ Composite.

Once that valiant effort began to fade, it was clear this wasn’t going to end well. And just like former champ Deontay Wilder, the market finished the session sprawled on the canvas.

Overhead Right

S&P 500

NASDAQ

Open

4,385

14,540

High

4.415

14,665

Low

4,361

14,482

Closed

4,360

14,486

 

By the closing bell, the S&P 500 Heat Map was mainly red with standouts in Energy, Materials, and Real Estate.

Message of Market

Despite crude closing higher, Energy stocks made a reversal lower, mostly on profit-taking. I did not like how Financials finished the session, giving up a big chunk of gains just days before they step up to the earnings plate.

In Communication Services, Facebook (FB) continued its slide, Google (GOOGL) tripped up, and profit-takers blinked and took some off the table on Netflix (NFLX).

S&P 500 Index

 

-0.69%

Communication Services XLC

 

-1.51%

Consumer Discretionary XLY

 

-0.41%

Consumer Staples XLP

 

-0.03%

Energy XLE

 

-0.37%

Financials XLF

 

-1.00%

Health Care XLV

 

-0.78%

Industrials XLI

 

-0.80%

Materials XLB

+0.01%

 

Real Este XLRE

+0.13%

 

Technology XLK

 

-0.55%

Utilities XLU

 

-1.36%

 

Market Breadth

Volume was anemic, but market breadth was not as bad as one might have assumed. In fact, up volume fractionally edged out the down volume on the NASDAQ, indicating (to me) that certain stocks are being accumulated.

But until there are more new highs than lows on the NASDAQ, the downside bias will remain in place.

Market Breadth

NYSE

NASDAQ

Advancing

1,418

1,609

Declining

1,825

2,750

52 Week High

153

102

52 Week Low

54

168

Up Volume

1.35B

1.80B

Down Volume

1.90B

1.71B

Brutal Close

One characteristic of the market since it began stumbling last month is harsh declines into closing bells. Right now, there is a clear series of lower highs and lows that cannot be reversed until there is a strong upside day that closes at the high of a session; a 1.0%+ move.

Another red flag is from the inability to climb back over the 50-day moving average, which was a staunch and reliable support point serving as a springboard for the buy-on dips crowd.

Portfolio Approach

There are no sector weighting changes this morning.

Today’s Session

Futures have reversed course and are now pointing to a positive open.  Oil is pulling back, down .3% to $80.25. The 10-year note is relatively flat at 1.60%.

On the economic front, NFIB Small Biz Optimism index came at 99.1 vs. 99.5 consensus.

Let’s see if this will be a strong upside day that closes at the high of a session and gets the rally started.