Today's trade begins to look suspicious after the Semiconductor Industry Association (SIA) announced this morning that global semiconductor sales rose 1.3% in November, yet the Semiconductor Index (SOX.X) 288.57 -2.68% extends losses below the psychological 300 level and breaks near-term technical support found two weeks ago of 291.24.
Also suspicious is Dow component International Business Machines (NYSE:IBM) $75.95 -1.82% trading lower after it announced it had won a $5 billion services contract with banking giant and fellow Dow component J.P. Morgan Chase (NYSE:JPM) $23.83 +0.12%.
While Dow technology components have Hewlett Packard (NYSE:HPQ) $17.33 -3.34% and Intel (NASDAQ:INTC) $15.91 -2.95% trading weak, it may just be that IBM's announcement today keeps the stock from suffering similar percentage losses as HPQ and INTC, but the negative trade becomes concerning for technology bulls.
Sector action shows the Disk Drive Index (DDX.X) 66.80 -3.04% leading today's sector declines, while a weaker than forecasted existing home sales report for November has the Dow Jones U.S. Home Construction Index (DJUSHB) 299.73 -2.18% trading weak on the session.
Treasuries, which had seen modest selling earlier this morning, have now turned higher as the benchmark bond's price reaches a session high of 115'058 and now looks to challenges the 52-week high for price set on the March 2003 futures (ty03h). This can be viewed as "defensive" action from the bond market as cash flows to the perceived safety of bonds. The benchmark bond's YIELD ($TNX.X) 3.776% is lower and looks to challenge key YIELD support from November 12th of 3.775%. A closing YIELD below the 3.775% level would be further negative for equities in my opinion as YIELD support from there become the lows found in October, and that may not be too different that downside risk in the major equity indexes.
We're seeing a little more volume today that in recent sessions from last week's "Christmas holiday" where many institutional traders took the week off.
NYSE volume is currently at 582 million shares traded, while NASDAQ volume is running 631 million shares. This is still rather light volume compared to other session that aren't surrounded by holiday's, but with New Year's day (this Wednesday) serving as a "bookend" for the end of year holiday period, today's slight pickup in volume may have brought some institutional traders back to the markets with some key technical damage having taken place late last week.
Market breadth is currently negative with decliners outnumbering advancers on the NYSE by a 17 to 14 margin, while NASDAQ breadth is much weaker by a 7 to 3 margin.
In the new highs versus new lows category, we're really seeing some divergence here today and may hint that NASDAQ market makers are really starting to apply some pressure on offers.
Reason for this thinking is the NYSE is showing 30 stocks hitting new highs versus 28 at new lows, while NASDAQ has "flipped" to show just 37 stocks hitting new highs versus 43 stocks hitting new lows. In recent weeks, we've seen this new high/new low category staying positive, but after recent technical breakdowns, today's slight "divergence" between the NYSE/NASDAQ new highs/new lows is interesting and informative. NASDAQ market makers are EXCELLENT risk managers and will begin applying pressure at offers if they observe order flow is beginning to overtake "buy side" order flow.