Stocks fell on light volume Monday, led by a correction in the energy sector. This was in sharp contrast to strength in the energy group last week when some analysts declared we had reached a bottom in oil prices.
The Energy Select Sector SPDR (ETF) (XLE) declined 1.8% following a sharp sell-off in crude overseas. This apparently was the result of China reporting its sixth consecutive monthly decline in industrial profits, which were off 1.4% in November. In the United States, oil fell 3.4% to $36.81 a barrel.
Blue-chip Chevron Corporation (CVX) and Exxon Mobil Corporation (XOM) fell 1.8% and 0.7%, respectively, while Marathon Oil Corporation (MRO) was pounded with a 6.8% loss. So far this year, energy stocks have fallen more than 23%.
Consumer discretionary stocks rose slightly, led by Amazon.com, Inc. (AMZN), up 1.8%, and Walt Disney Co (DIS), up 1.3%. Amazon reported strong Prime membership numbers causing analysts to boost their price targets, while Disney benefited from the success of its new “Star Wars” movie.
Gold dropped 0.6% to $1,070.50 an ounce. The yield on the benchmark 10-year Treasury note fell to 2.23% from 2.24% on Friday.
At Monday’s closing bell, the Dow Jones Industrial Average was off 24 points at 17,528, the S&P 500 fell 4 points to 2,057, the Nasdaq lost 8 points at 5,041, and the Russell 2000 was down 7 points at 1,148.
The NYSE Composite’s primary exchange traded 613 million shares with total volume of 2.5 billion. The Nasdaq crossed 1.3 billion shares. On the Big Board, decliners outpaced advancers by 1.6-to-1, and on the Nasdaq, decliners led by 1.8-to-1. Block trades on the NYSE increased to 3,778 from 2,494 on Friday.
The Nasdaq turned away from its 50-day moving average at 5,043. However, it did hold above the 200-day moving average at 4,980 and the important inflection point at 4,906.
Conclusion
With so little volume — just over 600 million on the Big Board — the public appeared to be out shopping for post-Christmas deals. But volatility is typically high in a low-volume holiday week, so bargains are available for sharp-minded buyers.
I still like biotechnology stocks, especially the Trade of the Day, Gilead Sciences, Inc. (GILD).
There are also technology stocks that deserve attention. Amazon, Microsoft Corporation (MSFT), Intel Corporation (INTC) and Cisco Systems, Inc. (CSCO) have wide daily swings that you can target with open orders at low weekly prices.
Now is the time to go shopping… for high-volatility stocks!
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
