U.S. markets closed mostly lower in Friday’s shortened trading session as falling oil prices and light volume weighed on the major indexes.
The slide in oil prices have put the commodity in a bear market and weighed heavily on the energy sector.
Volatility remains slightly elevated with the major indexes extending their losing streak to 2-straight weeks. Tech continues to look shaky with a death cross close to forming in the Nasdaq.
The Dow dropped 0.7% after trading down to 24,268.
Prior and upper support at 24,200-24,000 held with a close below the latter and late June lows being a continuing bearish signal.
The S&P 500 also declined 0.7% following the pullback to 2,631 and fresh monthly low. Support at 2,625-2,600 held with a move below the latter signaling additional selling pressure.
For the week, the Dow fell by 4.4% while the S&P 500 stumbled 3.8%.
The Nasdaq was down for the 4th time in 5 sessions after giving back 0.5% and testing a low of 6,919.
Support at 6,900-6,850 held with a close below the latter being a continuing bearish development.
The Russell 2000 was up a half-point, or 0.03%, following the intraday push to 1,498.
Resistance at 1,490-1,500 held with continued closes above the latter being a slightly bullish signal.
The Nasdaq sank 4.3% for the week and the Russell 2000 tumbled 2.6%.
Consumer Staples and Financials led sector strength after rising 0.4% and 0.2%.
Energy plummeted 3.1% and was easily the weakest sector while
Communication Services and Materials were down 1.3% and 1.1%, respectively.
For the week, there were no sectors that closed higher.
Technology was hammered for a 6.1% loss while Energy was with a 4.9% pullback. Communication Services and Consumer Discretionary tanked 4.4% and 4.1%, respectively.
Earnings
No update this week…
Global Economy – European markets settled mostly higher following comments from Italian Deputy Premier Di Maio that there are margins for a dialog with the EU.
Also, Italian Prime Minister Conte said his government would ask the EU to delay any infringement procedure as it works to resolve its budget standoff.
Germany’s DAX 30 rose 0.5% while the Belgium20 and the Stoxx 600 Europe were up 0.4%. France’s CAC 40 climbed 0.2%. UK’s FTSE 100 slipped 0.1%.
The Eurozone November Markit manufacturing PMI fell 0.5 to 51.5, below expectations for a print of 52.
The Eurozone November Markit composite PMI was down 0.7 to 52.4, missing forecasts of 52.
Eurozone November consumer confidence fell 1.2 to -3.9, weaker than expectations for a dip 0.3 to -3.
The German November Markit/BME manufacturing PMI slipped 0.6 to 51.6, missing estimates for no change at 52.
Asian markets were mostly lower following reports that the U.S. has been pressuring foreign allies to avoid doing business with some of China’s Tech companies.
China’s Shanghai sank 2.5% to a 3-week low and South Korea’s Kospi was down 0.5%. Hong Kong’s Hang Seng declined 0.4% while Australia’s S&P/ASX 200 added 0.4%. Japan’s Nikkei was closed for a holiday.
November PMI Composite Flash fell 0.3 to 55.4 while the employment component rose to 55.7.
The services PMI slid 0.4 ticks to 54.4 while employment dropped to 52.8 from 53.4.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) was up for the 4th-time in 5 sessions following Friday’s run to $115.76.
Resistance at $115.50-$116 was split with both levels holding into the close.
The higher highs and higher lows over the past couple of weeks remain a bullish signal.
Rising support is at $115-$114.50 and the 50-day moving average. A close below the latter would signal a possible near-term top.
RSI is approaching resistance at 60.
A move above this level would signal additional strength towards 65-70 and August/ July highs. Support is at 55-50.
Market Analysis – The Spider Small-Cap 600 ETF (SLY) opened at its session low of $66.15 with support at $66-$65.75 holding. A move below $66.50 would likely signaling additional selling pressure towards $65.25-$65 and late October lows.
The rebound to $67.17 split resistance at $67-$67.25 with both levels holding into the closing bell. Continued closes above $68 would be a slightly bullish signal.
However, a death cross has formed with the 50-day moving average falling below the 200-day moving average. This is typically a bearish technical setup for lower lows.
RSI is flatlining with resistance at 40. Continued closes above this level would signal additional strength towards 45-50. Support is at 35-30.
The Financial Select Sector Spiders (XLF) fell for the 3rd-time in 4 sessions following the pullback to $25.92.
Near-term and upper support at $26-$25.75 held with a move below the latter signaling additional weakness.
Resistance is at $26.25-$26.50 with more important hurdles at $27 and a 50-day moving average that remains in a downtrend.
RSI is in a slight downtrend with support 40.
A move below this levels gets 35-30 and October lows back in play. Resistance is at 45-50.
The percentage of S&P 500 stocks trading above the 50-day moving average closed Friday at 29.22% with the low tapping 27.83%. Upper support at 25%-20% held with a move below the latter signaling additional market weakness and slightly oversold levels.
The October lows reached the 10% level 3 times. Resistance is at 30%-35%.
Continued closes above the 40% level would signal a possible near-term bottom.
The percentage of Nasdaq 100 stocks trading above the 200-day moving average closed at 34.31% with the session low reaching 30.39%.
Upper support at 30%-25% held with last week’s low kissing 26.47%.
A move below the latter would be a bearish signal for additional weakness towards 20%-10% and January 2016 lows.
Resistance is at 35% with a move above this level signaling additional strength towards 40%-45%.
Existing Position Update
Choppy and directionless trading action dominated Friday.
It usually takes few days after holiday weekend for markets volatility to return back to normal.
So far holiday shopping is exceeding expectations – which tends to drive markets higher.
Technically, markets are choppy and bears are overpowering bulls.
Roger Scott.