It looks mushy, but we can never count out a countertrend rally. Santa has a few days left.
Today’s trade started on a more upbeat note with the main indices being led higher by renewed buying interest in the mega-cap space. The initial upside moves saw the S&P 500 test the 3,850 level.
Things started to deteriorate noticeably around 10:30 a.m. ET with no specific news catalyst. Instead, it was induced by a general lack of buyer conviction and presumably some ongoing tax-loss selling efforts.
Shortly after the open, advancers led decliners by a roughly 3-to-2 margin at both the NYSE and the Nasdaq. By the closing bell, however, decliners led advancers by a greater than 3-to-1 margin at the NYSE and a 2-to-1 margin at the Nasdaq. The main indices ultimately closed near their worst levels of the session, which brought the S&P 500 below the 3,800 level.
This has been a slop-fest of a Santa Clause rally, no doubt about it.
Quite the day! The Nasdaq closed at the low for the year. The once mighty Dow blew through the 50-day moving average. The chart of the 200-day trendline on the S&P 500 looks sick.
All 11 S&P 500 sectors closed in the red with energy (-2.2%) suffering the steepest loss by a wide margin. Falling oil and natural gas prices provided a catalyst for some profit-taking efforts. WTI crude oil futures fell 0.8% to $78.94.
The bulls will want to take back the psychological 3800 back. If not, the next support is around 3765-3700.
See you in the morning.
Added ELF as a new long today.
Have a great night.