Stocks started off modestly higher as futures built into the open, but as was the case before the election, futures indications do not necessarily determine market direction.
Stocks peaked early then sold across the board. Bloomberg reports that several large blocks of stocks from all sectors were pushed to sell at the same time. That dragged all indices lower and they are just now trying to find a floor to an hour and one-half of selling.
SP500 -4.47, -0.20%
NASDAQ -12.44, -0.23%
DJ30 -29.45, -0.16%
SP400 0.05%
RUTX 0.03%
SOX 0.32%
Dollar to blame? Some argue the continued climb in the dollar is causing a lot of uneasiness about corporate earnings. BUT, a stronger dollar benefits domestic companies, i.e. small and midcaps, and indeed those indices have exploded higher post-election. In other words, this is no new phenomena. It is more likely someone just decided to take some profits on a Friday of the first full week post-election.
Oil is lower (45.06, -0.36) as the OPEC hope of a deal starts to tatter again. The strong dollar is also a drag on oil prices: a stronger dollar buys more oil as oil is denominated in dollars. That is somewhat offset by the hopes of a stronger real economy versus a financial asset inflation economy and thus oil has tried to find a bottom the past two weeks at the August and September lows.
Stocks are working on a rebound off those lows, nothing definitive yet. We are watching MLNX, ZBRA right now, also watching UTX as it has put in a very nice test of its post-election surge. Banks are still working on their consolidations as are industrial equipment stocks.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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