Stocks sold from the early gains once again, hitting initial lows in the first hour. A bounce to midday has rolled over to lower session lows on SPY. No bounce as of yet.
SP500 -8.26, -0.37%
NASDAQ -47.91, -0.88%
DJ30 -37.11, -0.19%
SP400 -0.06%
RUTX -0.42%
SOX -1.58%
The rebalance is proving too much for upside attempts though the banks are holding out today and are mostly higher, though modestly. Oil stocks are holding their own as well. We are still wondering just how raucous the on close orders will be to close out the year.
Chicago PMI, Dec: 54.6 vs 55.2 vs 57.6 November.
Looking at the progression in the sub-indices as well as the overall PMI, it looks as if November's spike was an aberration as sentiment jumped but the hard numbers have dropped right back to prior levels.
New Orders: 56.5 vs 63.2 November vs 52.5 Oct vs 54.1 Sept
Production: 58.5 vs 59.1 Nov vs 54.4 Oct vs 59.8 Sept
Employment: 49.7 vs 49.7 Nov vs 51.1 Oct vs 49.2 Sept
Prices: 58.0 vs 56.8 Nov vs 59.5 Oct vs 55.5 Sept. The trend in prices is the one area that is up. Others slowing, prices up, stagflation in the air?
Inventories: Below 50, making it 8 months out of 2016 in contraction. Many respondents commented they did not want to build inventories ahead of year end.
What looked as if it could be a poetic end to 2016 with an up session for an up market appears to have fallen to harsh reality of a rebalance. But, when you consider why such a big rebalance is necessary, it is because of the market's success. So there is some symmetry there.
We have some positions flirting with support and stop points. We will see if the afternoon session can provide a rebound to hold the status quo. We would love to hold positions as we feel next week will give them some relief.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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