Major Indexes Hit Multi-Year Lows

Equity prices as shown in the major market indexes are at multi-year lows and traders are in a state of capitulation. By the end of the day, Monday, the DJIA (-250.89 -3.41% to 7114.78), the S&P 500 (-26.72 -3.47% to 743.33), and NASDAQ Composite (-53.51 -3.71% to 1387.72) closed down at support levels going back to the 1990’s. The Toronto Composite (-302.32 -3.80% to 7647.67) and Venture Board (-13.96 -1.56% to 878.94) were down there as well.

There were no winning sectors as Healthcare (XLV -2.0%), a major loser, was the best of the lot. Basic Materials (XLB -6.1%), pulled down by Chemicals, led to the downside. The Financials (XLF -3.5%) dropped equal to the broad indexes, and much of the loss was in the REITs ($DJR), which fell -7.8%, and not the banks.

Tuesday, JP Morgan (JPM) prudently slashed its dividend, permitting all banks to follow, without each getting hammered. That move was crucial to a base being set for a tradable rally.

In the Cara 100, there were only 5 winners, and only one of those was Garmin (GRMN +7.3%) was up more than CHL at +1.5% and TCK +0.7%. Garmin reported horrendous results and stated they would refuse forward guidance, yet the stock rallied hard in an otherwise very negative market day. The losers in the Cara 100 were Brazilian’s Embraer aircraft manufacturing (ERJ -13.2%), Gerdau steel (GGB -12.2%), and VALE CVRD base metals miner (RIO -11.8%), and Germany’s Deutsche Bank (DB -12.2%).

Traders are looking at the high-beta Brazilians for sigs of a market turn-around. The same three had been big losers n Friday (ERJ -8.1%) (RIO -7.6%) (GGB -7.2%) and are likely to be among the first to rebound.

Early in the day, Asia-Pacific equity markets were also losers: Shanghai (-4.56% to 2200.7) was the worst, largely because last week it was strongest; Australia (-0.58% to 3285.0), Nikkei 225 (-1.46% to 7268.6), Hong Kong (-2.86% to 12798.5), and India’s Sensex BSE 30 (-0.24% to 8822.1). The HK data was incorrect at the end of last week, which caused me to question it in the Week In Review.

At 9:00am ET Tuesday, the French CAC (-1.25%), the German DAX (-2.07%), and the UK FTSE 100 (-1.41%) were down more than the US equity futures. Traders were hoping that the futures would stay down and the market wouldn’t open with a gap up. That would hurt the chance of a bigger rally today.

US Treasuries yesterday were mildly stronger. The same appears to be the case this morning.

The US Dollar strengthened +0.96% to 87.32 yesterday, and was 87.50 at 9am ET. The Euro closed yesterday at 126.99 (-0.93%), and is now at 127.35. The big loser yesterday was the Yen (-1.31%), while the Pound gained a bit and the Loonie lost a bit.

Precious metals are down, but hardly out.

Comments

[dscianni:]

Bill, didn't you mention a BULL market was born sometimes end october?

If as a trader you look at daily market action to guide your decision, stick to that timeframe also in your predictions...

Mar 05 01:16 PM