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Off their lows, but lower

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The major indexes are off their lows of the session, but still see a lower trade as the Dow Industrials (INDU) 8,431 -0.98% sheds 84 points while the broader S&P 500 Index (SPX.X) 910 -0.96% falls 9 points, giving back yesterday's gains, and the tech-heavy NASDAQ-100 Index (NDX.X) 1,104 -0.77% slips 8 points, but holds above this morning's gap lower open of 1,100 and morning low of 1,097.

This morning's weaker than expected employment data from weekly jobless claims, along with the March Help-Wanted Index hasn't necessarily been "taken in stride" by the markets, but the weak job market data has been partially offset by the stronger than expected March durable goods data which showed a 2% gain for the recent month.

In yesterday's 01:00 PM EST Update, it appeared that a decline in oil prices had helped boost stocks back near their best levels of the session in yesterday's trade, and today's action in the oil markets shows further weakness, despite OPEC agreeing to cut oil output by 2 million barrels per day.

The June Light, Sweet Crude Oil futures (cl03m) $25.80 -3.18% has broken to a 4-month low and appeared to give a most lift to the equity indexes, with "modest" being the operative word.

Treasuries continue to see a rather aggressive round of buying today with the 5-year YIELD ($FVX.X) 2.837% falling 1.21 basis and once again looking to test a trying to round-out 50-day SMA at 2.811%. The longer-dated 30-year Treasury sees its Junes futures contract (us03m) $113'120 +1.11% still holding the bulk of today's gains and holding above its April high of $113'11 as its YIELD ($TYX.X) falls to 4.809%. In this morning's Market Monitor we took a look at the 5, 10 and 30-year YIELD charts. One level of technical importance as it relates to YIELD has us monitoring the 30-year YIELD ($TYX.X) closely here at the 4.8% level. A trade at 4.8% is a "downside alert" on this bond's YIELD as it relates to equities, as a YIELD trade at 4.8% would be a double-bottom sell signal on this bond's YIELD (buy for the bond itself) and begin to hint of a potential asset allocation shift starting to pick up as cash moves to the perceived safety of Treasuries.

Today's weaker than expected weekly jobless claims data, along with a weaker Help-Wanted Index reading of 38, which came in below consensus of 39 and well below year-ago levels of 40, put greater focus on tomorrow's release of New Home Sales for March, which has economists looking for a rebound from February's slide and rebound back to 905,000 annual rate.

As the labor market continues to deteriorate, today's further decline in the Help-Wanted Index still shows little demand for jobs and the mounting number of claims continues to build. New home sales become important as it is a more deeply rooted job creation sector for the economy. With summer months just weeks away, the employment market could use a boost from the new home construction sector into the building season. If weak, builders may curtail hiring and we could continue to see jobless claims grow.

Market volumes are very close to matching yesterday's volume at the 01:00 hour, but slightly lighter with the NYSE currently running just over 800 million shares. Breadth is negative at this hour with decliners outnumbering advancers by a 3 to 2 margin with 87 stocks trading new 52-week highs compared to 14 stocks having traded a new 52-week low. 52-week lows on the NYSE have held at 14 in the last 2-hours.

NASDAQ's current volume shows 914 million shares traded with decliners outnumbering advancers by a narrow 4 to 3 margin. 108 stocks have traded a new 52-week high compared to 15 stocks having traded a new 52-week low. Similar to the NYSE, new lows have been stable the past 2 hours at 15.

Jeff Bailey

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