As I considered the price charts of the major indexes this weekend, I concluded that the markets were just treading water ahead of the Fed's announcement this week. But today's price action makes me worry that there is more in the works. On the positive side SPX closed at $1984, down only one dollar. It traded down below $1980 earlier today, but it recovered into the close. It appears that SPX is holding support in the $1985 area. But then the news gets much worse. RUT lost $14 to close at $1147 while the NASDAQ composite lost $49 to close down at $4519. Until today, NASDAQ had been holding up well, so this weak performance in the NASDAQ and RUT is alarming. Either the Fed announcement is irrelevant or something else is in play.
Underscoring these concerns was the behavior of the VIX today; in recent days, it has commonly spiked higher intraday, but then pulled back before the close. Today, it closed almost a full point higher at 14.1%, very close to its intraday high at 14.2%. So I'm not the only one a little concerned about this market. The divergence of SPX from RUT and NASDAQ was marked today. SPX actually traded into the black around 2:30 ET, but then slowly declined to close in the red by only one dollar. By contrast, RUT and NASDAQ didn't show any life all day; their charts were pretty steadily headed south.
Trading volume was lower today with 1.8 billion shares of the S&P 500 stocks changing hands. Trading on the NYSE declined 3% but trading volume rose 11% on NASDAQ (everyone was selling NFLX and TSLA).
The Empire manufacturing survey came in at 27.5 for September, up markedly from 14.7. Industrial production fell off 0.1% in August, a change from July's +0.2% gain. Capacity utilization was essentially flat in August at 78.8% (79.1% in July).
I will be anxiously watching the futures this evening and tomorrow morning to see if this weakness continues.
Dr. Duke's Blog
A Weak Monday
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- Written by Dr. Duke