U.S. markets continued last Thursday's slide but the major indices are bouncing from their worst levels of the session. Without any catalyst to drive stocks higher and second quarter earnings looming just days away money seems to be sitting on the sidelines. Oil continues to be weak and another steep decline today weighed heavily on the energy sector. Meanwhile the ISM services index came in better than expected.
Asian and European markets were mostly lower. The only bright spot was the Chinese Shanghai index, which rose 1.1%. European stocks are really under performing. Last Thursday the euro-zone was hit very hard and after a meager bounce on Friday the sell-off continues today. Oil, energy, mining, materials and financial stocks were all leading markets lower. The Hong Kong Hang Seng, the Japanese NIKKEI, the French CAC-40, the German DAX indices were all down 1.2% or worse on Monday. The English FTSE managed a 0.98% decline.
The Tempe, Arizona-based Institute for Supply Management released their services index this morning. Economists were expecting a bump to 45.5 compared to May's reading at 44. June's number was 47.0. While this is improvement it's the ninth month in a row that services contracted. Readings under 50 represent a contracting economy.
Crude oil was one of the big stories today. The commodity continued to sell-off as investors react to a growing concern that the economic recovery will be weaker than expected and thus demand will remain light. Last night oil futures dipped under $64.00 a barrel and they're currently down about 4% in the $64-65 region. This sent the OIX oil index to a 2.3% decline and the OSX oil services to a 2.75% decline.
Some of the worst performers today are the miners. The XAU gold & silver index is off 4.8% and the GDX gold miners ETF is down 4.75%. Yet the GLD gold ETF is only down 0.6% and trading near $90.00.
Currently the S&P 500 index is off less than three points at 894 and appears to be bouncing from its simple 200-dma. The NASDAQ composite is off 1.0% near 1777 and its simple 50-dma. The Dow Industrials are actually up about 7 points and nearing the 8300 level. The Russell 2000 index is down 1.2% and hovering near 490.
Let's take a quick look at charts for the major averages:
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
Scanning the OptionInvestor.com play list I see that ACL is flirting with a breakdown under support at the $115.00 level. BDX is showing some strength with a 1.4% bounce back to $70.00. DGX is also showing some relative strength with a 1.45% gain. Defensive stock LO is really showing strength with a 2.6% rally toward resistance near $70.00.
Looking at the put plays AGU is down 3.7% and has hit our trigger to buy puts this morning. AZO is trying to bounce and close to breaking through short-term resistance. Weakness in energy has pushed CLB to a 1.8% decline and shares are nearing support near $80.00 and its 100-dma. FCX is down sharply, gapping down at 47.92 and plunging to an 8.1% loss. Meanwhile the gambling sector is down sharply and WYNN is off about 2.4%.