Monday, December 01, 2014

Today's U.S. equity market fulfills direction of Friday's trades

U.S. equities varied widely today in their reaction to the drop in oil prices and subsequent reductions in the overall market's liquidity.  Friday's 9:30am to 1:00pm day wasn't  long enough to finish the thought.  Today was a logical follow-on as the impact of a roiled oil market affected energy related names in general and seemed to see specific parts of the market as either sources of liquidity or as profit taking protection.

It was a weak market today in general, but small cap and mid cap names took it on the chin.  They were the source of liquidity, or the victim of the absence of buyers as investor's wallets were not open to allocations there.  Technology titans that had been doing well or had been showing momentum were another sector that had pronounced losses.  Look at the Googles, Facebook, Apple, Yahoo, and Twitter as examples of investors backing off.  The exact rationale is unclear other than taking money off the table in names with high valuations like FB and TWTR, doing the same with other solid major stocks that had been attracting buyers in recent months.  Oil related stocks continued their falls from Friday, but Big Oils like Exxon, Conoco Phillips, and Chevron stayed steady at first and then rose after Friday's decline.  That was interesting.

Tomorrow will be interesting as well.  The market will say whether this was a one and done, over two days, reaction to OPEC's push down of oil prices, or whether this is a market mood that will spread into other sectors.  The thought here is that the market will steady and then ease back up as the week develops, with some incredibly oversold oil service and oil related names having a visible bounce back, not to pre-Friday levels but appreciably above where they ended today.  Small caps and Mid caps may continue to face a lethargic market for their shares near term as the bigger caps names attract the attention in the sorting out of the energy market impact.

Of course this is just speculation here with only a little skin added to the game in this very near term outlook.  One market move today that certainly catches one's eyes is the turn up in gold and silver.  Is that a cause for worry, or just long overdue, and ready to move up with any market uncertainty.  It's one more market to sit back and watch, which is the main activity here. 


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