A volatile trading day ends slightly above water

November 24, 2015 -

Dennis Slothower:
For the last four days stocks have shown a flattening profile, with neither advancers nor decliners making any headway for the broader market – today was much the same, though we saw a much lower intraday low and a close just above water. . . . .

Today's Markets

Selling was dominant in early trading today, some say because a Russian fighter jet was shot down near the border of Turkey and Syria. But as the day wore on, buyers clawed back the early losses, managing to close a bit above water. But we still saw that a persistent and somewhat larger “spinning top” candlestick pattern, as we discussed yesterday - making for four consecutive days of essentially going sideways as we head into the Thanksgiving holiday.

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The Dow edged up 20 points (+0.1%) to 17,812, the Nasdaq crept up a fraction of a point (less than a tenth of a percent) to 5,103 and the S&P 500 inched up 3 points (+0.1%) to 2,089. The NYSE finished at +0.27% and the small cap Russell 2000 at +0.73% - leading all major indexes.

We are told that a Russian-made SU-24 was shot down by jets from Turkey after receiving repeated warnings about entering Turkish air space, although Russia claims the jet remained in Syria for the duration of its flight.

What few traders were at their desks on this holiday week showed their concern with a fairly heavy round of early selling in the U.S. and in other equity markets. The shooting adds to concerns over escalating tensions in the Syria region and the growing refugee crisis. Clearly, optimism for an alliance between Russia and the West in the fight against ISIS, as French President Hollande met with President Obama today, will be dampened considerably, since Turkey is a NATO member.

Overseas, the Asia-Pacific region turned in another mixed performance. Japan's Nikkei 225 Index rose by 0.2 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index dropped by 0.5 percent, the German DAX Index and the French CAC 40 Index both tumbled by 1.4 percent.

Sideways Channel Developing

Despite a mild gain today, this sideways “spinning top” trade over the last four sessions suggests there may be further downside ahead. Check out what the NYSE has done over the last four days in this 5-minute chart:

If you look at the daily trade for each day you can see how prices have risen and fallen with the end result mostly going nowhere and definitely working against the upward trend seen the last couple of weeks.

Perhaps it means little, given that many people are more occupied with how they are going to get from A to B for their planned Thanksgiving meals and shopping spree the remainder of the week. Volume has been light and will be much lighter on Friday, after Thanksgiving on Thursday. Under such light volume on Friday we could see a determined intervention push prices sky high or they could also let them fall, hoping for discount buying to come in after the bulk of traders return to their desks next Monday.

As we have mentioned, we will send out an update tomorrow and then nothing until next Monday – perhaps this choppiness is nothing but a reflection of where most of our attention is this week.

Government says economy improving

On the U.S. economic front, the Commerce Department released a report before the start of trading showing that economic activity increased by more than previously estimated in the third quarter. The report said real gross domestic product climbed by 2.1 percent in the third quarter compared to the previously reported 1.5 percent increase. The upward revision matched economist estimates.

Meanwhile, the Conference Board released a separate report unexpectedly showing a substantial deterioration in consumer confidence in the month of November.

The Conference Board said its consumer confidence index tumbled to 90.4 in November from an upwardly revised 99.1 in October. The steep drop came as a surprise to economists, who had expected the index to climb to 99.6 from the 97.6 originally reported for the previous month.

Commodity Bump

Gold stocks showed a substantial move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 4.4 percent. The index is rebounding after closing lower in the two previous sessions.

The strength among gold stocks came amid an increase by the price of the precious metal, with gold for December delivery climbing $7 to $1,073.80 an ounce.

Considerable strength was also visible among energy stocks, which moved higher along with the price of crude oil. Crude for January delivery jumped $1.16 to $42.91 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index surged up by 3.2 percent, while the NYSE Arca Natural Gas Index and the NYSE Arca Oil & Gas Index advanced by 2.4 percent and 2.2 percent, respectively.

Looking Ahead

Trading on Wednesday may be impacted by the release of a slew of U.S. economic data, including reports on weekly jobless claims, durable goods, personal income and spending, and new home sales.

The question is whether there will be enough people at their desks to care enough about this new economic data tomorrow to place any trades on it.

I doubt it – but we shall see.

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