Monday was a troubling day on many fronts. Stocks opened down mildly on some weak data out of China but selling pressure built all day as the extreme selling in precious metals carried over to equities. Then late in the day the bombs in Boston hit the news which pressured the markets to another leg down. All in all, it was the worst session since late February, and took the S&P 500 to the key support trend line it has bounced off four times since November 2012. We shall see if there is yet another bounce. The S&P 500 fell 2.3% and the NASDAQ 2.38%. The Russell 2000 was much worse, down 3.78%.
The S&P 500 has come back down to test this key trend line that it has now bounced off sharply four times. It was sitting right near the line before a last minute market purge so technically this line was broken today. Bulls might be pressing their luck to see a bounce happen twice in two weeks. We shall see.
The NASDAQ has broken this trend line twice in two weeks but again, it will more or less travel with the other indexes so in and of itself the technical setup is not quite as important other than to point out it is the weaker index.
The Russell 2000 is the major issue right now – not only did it break this trend line from the January breakout, but it is the first index to make a lower low – that is a low below the previous low as signified by the blue arrows on the right side of the chart.
Breadth was horrendous – the worst of the year, and the worst of this rally. Only similar reading in the past 6 months was at the November bottom.
The McClellan Oscillator is already in an oversold condition since the damage today was extreme – but frankly it barely got above zero even as we hit all time highs on the S&P 500 since we are in a strange marked with narrowing breadth. You can see this by the fact as the S&P 500 continued to make new highs, the NYMO failed to do so, and in fact was making lower highs on each rally attempt.
Bonds roared again today although you’d think it would have been even better considering the carnage.
Speaking of carnage the entire commodity space was hammered. But precious metals were simply a disaster. Here is a longer term chart of gold to show the damage and then a shorter term chart of silver simply to showcase it in a way more stark to the eye. With gold you can see two years of gains given back – it is now down to early 2011 levels. As extreme as volumes were Friday, they were nearly double today.
Oil and copper were not spared.
As for stocks or sectors throw a dart – it was a disaster everywhere. Two groups that stood out for extreme awfulness were housing and the oil stocks.