Monday could be summed up by a striking reversal. Stocks gapped up for the second straight session as Italian election results seemed to go the way the market wanted - avoiding former Prime Minister Silvio Berlusconi. But as the day progressed, the election results turned more towards his favor as his coalition won the upper house of parliament, and with that a catalyst was in place for a selloff. Indeed markets went from up over 0.5% to down nearly 2% - a major change. The worry is Berlusconi's return to some power will push Italian politics back in paralysis, versus the path of reform the market had been pleased with. The S&P 500 fell 1.8% and the NASDAQ 1.4%. Small caps were hit especially hard as the Russell 2000 dropped 2.2%.
The S&P 500 had originally looked to recpature the channel it had been traveling since mid November. However this sharp reversal once again pushed the index out of the channel and confirms a more cautionary stance towards the market is necessary near term. And just like that 5 weeks of gains are gone as this index returns to late January levels. With that dip buyers have been burnt multiple times in the past few sessions, something new to the market in 2013.
The NASDAQ broke back below spring 2012 highs, and sits just above its 50 day moving average.
After a one day respite to work off oversold levels the NYSE Oscillator is once again in the -50 range.
The VIX index - which measures implied volatility in the market (to some it's a measure of "fear") had one of its biggest moves in a long time with a staggering 34% gain.
The financials have been the go to sector in recent weeks, and we can see today they suffered significant damage, falling below the flag they had formed the past month.
Names like Morgan Stanley (MS) were crushed.
Three D printing stocks had a rough day as 3D Systems (DDD) reported earnings and guidance was not up to snuff.
3D Systems said Q4 revenue rose 45% to $101.6 million. That lagged consensus estimates for $103.9 million. Earnings per share, on a split-adjusted basis of 26 cents, were a penny above consensus estimates of analysts polled by Thomson Reuters. The 44% EPS gain was the 10th straight quarter of double- or triple-digit growth but a deceleration from the previous quarter.
Although EPS beat by a penny, gross margins and operating margins came in below the expectations of some analysts. That raised concerns about cost management, said Troy Jensen, research analyst at Piper Jaffray. Operating expenses rose 55% to $34.3 million.
For 2013, 3D Systems estimated split-adjusted EPS, minus items, in the range of $1 to $1.15. The consensus estimate of analysts is $1.05. It sees revenue at $440 million to $485 million, or growth of 24% to 37%. At the midpoint, that would be its slowest sales growth in four years.
Bernanke will testify to Congress the next few days and traders will be looking for his normal words of encouragement; that said it is difficult to find what new he could say that has not been heard hundreds of times.