STTG Market Recap January 2, 2014

Stocks opened 2014 on a sour note as 2013's last minute rally (in the last 45 minutes of Tuesday) was repelled along with some extra downside.  The S&P 500 fell 0.89% and the NASDAQ 0.80%.  If you have been a consistent STTG reader you would have noted on Tuesdays' chart that the NASDAQ - after 2 days of rest - had once again hit the top of its year long channel marking a good probability of some rest/downside.  That hcart has been gold for our readers, so we'll continue to focus on it, until the pattern breaks.  Today was actually the first down day to open a year since 2008 as the past few years have been led by strong gains right out of the gate.   Slowing growth was pointed to as a culprit but with such an overbought short term market, any reason would do.

China's official purchasing managers' index dropped to 51.0 in December from 51.4 in November, according to the National Bureau of Statistics. Any number over 50 indicates an acceleration in the manufacturing sector.  A separate PMI measure released Thursday by global bank HSBC came in at 50.5, a three-month low.  The official government gauge is heavily weighted toward large enterprises, while the HSBC survey taps a smaller sample size and places greater emphasis on smaller firms.

The U.S. also had a key manufacturing report which was solid:

The Institute for Supply Management (ISM) said its index of national factory activity stood at 57.0 last month. That was in line with economists' forecasts but a touch below November's 2½-year high of 57.3. Readings above 50 indicate expansion. Even so, December's result was the second highest reading of the year.

We mentioned Tuesday how the S&P 500 was so overbought it was not even within sniffing distance of the 10 day moving average - today's move helped alleviate that condition.

spx

nasdaq

There were a lot of interesting moves in commodities today as there were strong shifts in gold, silver, and oil.  It looked like oil was trying to break out of a flag late in 2013, but today's move completely negated that.

silver

wtic

Emerging markets, as expressed by it ETF (EEM) also had a rough session.

eem

It was interesting to note that the biotechs - the stars of 2013 - held up very well today.

ibb