Morning Minutes 12/18/2018

Morning Minutes

Assessing the Technical Damage Done By Monday’s Selloff

December 18, 2018
8:45 am EDT

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

Yesterday was a particularly brutal day for world markets as a number of significant support levels failed to hold against a tsunami of selling. The combination of tax loss selling, record shattering mutual fund redemptions (it turns out that not only was the big  $46.2B one week outflow reported by Lipper and mentioned in yesterday’s Morning Minutes a record, it was more than double the previous record), plus fear and uncertainty over what impact political tensions could have on economies and resource demand around the world, combined with the upcoming holiday slowdown has created a perfect storm for world markets, encouraging investors to move to cash or defensive havens.

 

A lot of technical damage was done across markets yesterday, including:

1) WTI crude oil dove under $50.00/bbl for the first time since October of 2017.

2) The Dow Industrials fell below 24,000 and took out their July low. On top of this, the 50-day average fell below the 200-day average registering a Death Cross.

3) The S&P 500 took out its March closing low and closed at its lowest level since October of 2017.

4) The NASDAQ 100 took out its November low, but did manage to hold above its April low.

 

So far today, US index futures are pointing to a positive open with Dow futures up 132 points. Compared with Monday’s 502-point plunge, however, this looks more like a common trading bounce and potentially the start of an inside consolidation day rather then the start of a new advance. Meanwhile WTI is extending its losses this morning, falling another 0.8% as it drops further away from the $50.00 level.

It’s a light day for business and economic news putting the spotlight squarely on what the Fed has to say about interest rates tomorrow afternoon.

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