STTG Market Recap December 16, 2013

Stocks staged a sharp turnaround in the futures market as significant losses Sunday night turned to very good gains by Monday morning, on the back of "flash" (i.e. initial) purchasing managers index data out of Europe.  The news was especially good in the largest economy as German manufacturing PMI hit a 31 month high.  After opening up big stocks stayed in a relatively narrow range all day with the S&P 500 up 0.63% and the NASDAQ 0.71%.   The big event of the week is the Federal Reserve meeting announcement Wednesday but those thinking there will be any taper in quantitative easing remain in the minority.

The indexes are still ok although we have seen some degradation the past 10 days.  Breadth continues to be an issue, as the indexes are doing ok but less stocks are really participating.  We see the S&P 500 below the 20 day moving average while the NASDAQ is still above.

spx

nasdaq

The action Friday and today helped to work off extreme oversold conditions on the NYSE McClellan Oscillator.  You can see why this is so handy - 8 out of 10 times when it hits region 1 of overbought in the pink shade we get a knee jerk bounce of some sort.  The other 2 times those who trade on short term time frames will get burnt as there is another leg down but that is usually short lived.  That said, this figure has not sustained over 0 for quite a while now which highlights our comments about breadth.

nymo

Exxon Mobil (XOM), the second largest company in the U.S. by market cap, has quietly had a good run of late.  Today, Goldman Sachs raised its rating on the stock to "buy" from "neutral," saying the company was nearing a turning point in terms of production growth and capital intensity.  It is not often we see this stock make a 2% move in 1 session.

xom

Another giant, Boeing (BA) is up some 2% in after hours on news that it is raising its dividend and has a $10B buyback in place.  This stock has been a superstar in 2013.

Boeing Co's board raised the company dividend about 50 percent on Monday and approved $10 billion in new share buyback authority that the company said it would use in the next two to three years.   The new repurchase total is in addition to about $800 million remaining from the company's 2007 stock repurchase authorization, and will begin in 2014, Boeing said. The quarterly dividend is 73 cents per share, up from 48.5 cents.  Boeing is enjoying a surge in revenue and cash as it ramps up commercial jet production, with a target of delivering a record 635 to 645 aircraft this year. Those gains help offset declining U.S. military spending, which is hampering Boeing's defense businesses.

ba

Much maligned Herbalife (HLF) surged after the company announced there were no material changes to its financial re-audit.

hlf

Twitter (TWTR) came back down from the stratosphere a bit after a monster week last week.  We finally have 10 and 20 day moving averages on the stock so you can see how extended it was.

twtr

Via Bespoke we see an interesting chart of the hourly returns of the S&P 500 the last 6 months.  So many days we say "today the market gapped up and did little the rest of the day..." such as today.  You can see this is a pattern.  A great proportion of the gains come from the overnight gap ups.

As shown in the chart, had you bought the S&P 500 at the close and sold at 10 AM ET on the next trading day, you would be up 7.97% over the last six months. This is by far the best time of the day for the market. From 10 AM to 3 PM, the market has seen gains, but they have been minimal. Had you bought at 3 PM and sold at the close, however, you would be down 4.52%, which is a big loss in a market that is up 10% over the last six months.

Bespoke