View From The Hill (Jan-4-2015): Shadow of China Covers Global Markets

Posted on Posted in Views From The Hill

Commentary

bulls-and-bears4

Disappointment over China’s weaker than expected manufacturing data and concerns over the expiration of insider lockups and investors’ front-running them overshadowed the positive signs of expansion in manufacturing activity throughout key countries within the European Union. Of course, halted trading on China’s exchanges after its CSI 300 Index crashed 7% didn’t help morale much either.

The aversion for risk was contagious and spread throughout Europe and carried over into the U.S. equity markets. Needless to say, bonds, gold and the Japanese Yen were some of the day’s most favored havens of safety.

Geopolitical risks were another issue confronting traders and investors as Saudi Arabia severed diplomatic ties with Iran after unimpeded protesters  burned its embassy upon news of the execution of a Shiite cleric.

Lastly, in case anyone has not noticed, the manufacturing data  reported out of the U.S. was not encouraging. December-2015’s ISM Mfg PMI declined for a sixth consecutive month and has now contracted (readings below 50) for 2 straight months. Today’s results were  @ 48.2 vs. consensus @ 49.0 and previous @ 48.6.

One day does not a market make, but the market will need time to process these concerns and adjust pricing to reflect the “perceived” risks until reality provides clarity.

No further comments…

 


Performance Summary

*Trends: ST = short-term; MT = Intermediate-term; LT = long-term

vfth-performance-1-4-2016
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Market Condition

stanleySometimes a picture speaks a thousand words, whether it is Stanley to our left or a daily chart of the SP-500 below. The weak market internals which I mentioned leading into the holiday season proved to be a valid warning. Of course, concerns over China also played a role. However, one can see that the resistance of downward trend has yet to be broken and, until it is, the risks must be respected. Bearish momentum has accelerated and while any reversal of such may provide short-term trading opportunities, I would not advise committing serious capital without stronger bullish signals. This is a trader’s market. Expect increased volatility.

To end this on a positive note, I do hereby acknowledge the successful testing of previous support levels.

Hillbent on the Market Direction…

 

Daily Chart Technical Analysis
sp-500-daily_1-4-2016
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Market Breadth
Advancers 89 Decliners 412
New 5-day highs 16 New 5-day lows 458
New 52-week highs 1 New 52-week lows 13
Bullish reversals 62 Bearish reversals 5

 

Market Momentum
% > 20 M.A. % > 50 M.A. % > 100 M.A. % > 200 M.A.
25% ↓ 26% ↓
38% ↓
38% ↓
↑ = positive momentum; ↓ = negative momentum; and ↔ = neutral momentum

 


Volume Radar Alerts

  • Vol % = volume percentage greater than average volume
  • SIR = short interest ratio or days to cover
vfth-volume-radar-1-4-2016
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Disclaimer

Hillbent does not provide individualized market advice. The information we publish regards securities in which we believe our readers may be interested and our reports reflect our sincere opinions. Nevertheless, they are not intended to be personalized recommendations to buy, hold, or sell securities. Investments in the securities markets, and especially in options, are speculative and involve substantial risk. Each individual investor should determine their respective appropriate level of risk. It is recommended that you seek personal advice from your professional investment advisor and conduct further independent due diligence research before acting on information published in any of our reports. Most of our information is derived directly from information published by the companies on which we report and/or from other sources we deem to be reliable, without our independent verification. Therefore, we cannot assure the completeness or accuracy of information contained within these reports and we do not in any way warrant or guarantee the success of any action which you take in reliance on our statements. Hillbent.com, Inc. or its affiliates may own positions in the equities mentioned in our reports. We do not receive any compensation from any of the companies covered in our reports.

 

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