We are looking at another weak open after we had a fairly flat day yesterday.
The markets were unable to put together a strong snap back response to Monday's selloff and we are currently looking at a gap down premarket that will take us below some psychologically important levels. It is safe to say that the "Santa Clause Rally" or the "January effect" was a bust this year. There are plenty of analysts with statistics that they define as a bad omen for the remainder of the year. It is possible that we can determine the entire year based on what happens in the first 3 days of trading but I guess I am just a bit too optimistic for that. Earnings season starts next week and I will be more convinced if the majority of earnings confirm that the omen is really as bad as anticipated.
We had more bad new yesterday with AAPL reportedly cutting production on I phones, the dollar strengthened as China allows the yuan to weaken, oil is unable to put together a sustainable rally and this morning we have North Korea announcing the successful of its first hydrogen bomb.
We get oil inventory data at 10:30 E.T. and if we get a strong build in oil and gas look for the weakness to continue in that sector. Then we get the Fed minutes at 2:00 pm E.T. and if we get some Fed speak suggesting raising rates again in the very near future that could be the proverbial cherry on top and be enough to really put some fear into the markets.
This could be the beginning of a bear market and the end of the buy the dip era. No one really knows for sure. We will only know it after the fact. All we can do is adjust to what the market is telling us and protect our capital.
I am not that concerned about how the markets open. What matters most to me, is how we close. Keep an eye on volatility today TVIX, UVXY, XIV, OVX will all be on my radar. Also watch gold and gold miners for that perceived safety trade.
Stocks on my radar premarket
Bullish and may have a swing or lottos in play
Cautiously optimistic
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