The market had a continuation sell off and tested the Light Blue line I mention yesterday in the video.
As we can see from the chart the market correction is already significant and we are moving to oversold levels in the short term. My algorithms are giving buy signals here – however because of risk management we are holding those alerts.
The Market internals still very weak however are find short term support now, around 1770. Cash is exiting 4.1 to 1 in the NYSE and 6.6 to 1 in the Nasdaq.
ESH4
Market Internals
NEWS:
Stocks Lower as Market Sell Off Continues! Stocks on Wall Street were lower at midday as a decline in new home sales last month more than offset any positive momentum built in the early hours by Caterpillar’s (CAT) better than expected earning report. Stocks began the week in positive territory, briefly bouncing back from last week?s sell-off, but the market resumed its downward trend by the time the larger than expected drop in new home sales was reported near 10 am ET. As the lunch hour approached, the averages were all in the red and stood near session lows. ECONOMIC EVENTS: In the U.S., new home sales dropped 7% to a 414K rate in December from a downwardly revised 445K rate in November, missing expectations. However, the report may have been somewhat discounted as largely due to the extreme weather seen in many markets during the month. In Europe, the Ifo institute?s German business confidence measure beat economists? forecasts and rose to its highest level in more than two years with a 110.6 reading in January. Also, the Organization for Economic Cooperation and Development reportedly estimated that European banks have a combined capital shortfall of about 84 billion euros, with Credit Agricole (CRARY), Deutsche Bank (DB) and Commerzbank (CRZBY) listed among the banks having significant gaps. COMPANY NEWS: Dow component Caterpillar advanced about 4% after its quarterly earnings easily beat the consensus expectation of analysts. The company also gave a forecast for revenue in the new fiscal year that surpassed expectations and approved a program to repurchase up to $10B of its shares. MAJOR MOVERS: Among the notable gainers was Chinese online game maker Shanda Games (GAME), which gained 13% after its controlling shareholder proposed to acquire the company in a “going private” transaction for $6.90 per American depositary share. Also higher was Robert Half (RHI), which rose 3% following an upgrade to Buy from Neutral at research firm Northcoast, which cited the valuation of its shares and expectations for top-line trends to accelerate due to easier comparisons and improving end markets. Also higher following an upgrade were shares of Merck (MRK), which gained nearly 3% after Morgan Stanley upgraded the stock two notches to Overweight from Underweight. Among the noteworthy losers was Geron (GERN), which fell 19% after disclosing that an investigator-sponsored clinical trial to evaluate imetelstat in patients with myelofibrosis and other myeloid malignancies has been closed to new patient enrollment and that the company believes approximately 20 patients have discontinued from the study since its inception. Also lower were shares of Xerox (XRX), which were downgraded to Market Perform from Outperform at BMO Capital and slid almost 5% near noon.
