Markets had a wild ride yesterday, with more than a thousand point swing, intraday. Our contributors remain cautious, but optimistic, that markets will soon stabilize.
This commentary is from John Gray, John Gray, Investors Intelligence, www.investorsintelligence.com, 914-632-0422, January 21, 2016:
Equity indices finished negative yesterday, with the S&P 500 lower by 1.6%. That close was a good distance above the intraday low, some 47 points beneath that. The Dow Industrials was lower by 1.6%, 316 points off its low. That recovery intraday coincided with heavy volume at almost 1.5 billion on the NYSE. Mid-session breadth was massively to the downside but that improved by the close with the afternoon rally. With 1395 new 52-week lows on the NYSE there was a whiff of capitulation but that will only be confirmed by a rally into the end of the week to print selling climaxes.
The sell-off saw important tests of long-term technical levels, likely driven by forced selling given some large intraday drops in energy stocks, with many big cap energy names approaching double digit percentage declines at their nadirs. The trigger may have stemmed from a poor GDP report out of China and the subsequent lack of stimulative measures.
Healthcare (+0.2%) was the only S&P 500 sector to end positive and it too staged an impressive turnaround in the afternoon, extending its outperformance of the past several weeks. The weakest area was Energy (2.9%), again off its worst levels on a day when Crude Oil at one point had dived by 6.5%.
Medium-term indicators have unwound considerably over recent weeks and that bodes well for trading over the next few months once markets stabilize.
