The market plunged Thursday, dragged down by energy stocks, and erasing a broad-based three-day rally. With the decline, reality seemed to re-establish the technical patterns from before the Federal Reserve’s move to raise rates.
The Dow Jones Industrial Average and Nasdaq each fell 1.4%, and the S&P 500 was off 1.5%. Following what appeared to be profit-taking at the opening, a rally began that recovered much of the losses before selling resumed and the major indices closed at new lows for the day.
The U.S. dollar index rose against a group of currencies, and the euro fell 0.6% against the greenback to $1.0821.
Tech giants Apple Inc. (AAPL) and Oracle Corporation (ORCL) lost 2.1% and 5.1%, respectively. Oracle reported lower-than-expected revenue growth.
Commodities fell as a result of the dollar’s revival. Crude oil declined 2.8% to $34.95 a barrel. Gold closed at a fresh six-year low at $1,049.60, down 2.5%.
At Thursday’s close, the Dow Jones Industrial Average fell 253 points to 17,496, the S&P 500 was off 31 points at 2,042, the Nasdaq declined 69 points to 5,003, and the Russell 2000 dropped 14 points to 1,135.
The NYSE Composite’s primary exchange traded 960 million shares with total volume of 4.3 billion. The Nasdaq crossed 1.9 billion shares. Block trades on the NYSE fell to 5,597 versus 5,882 on Wednesday.
On the chart of the PowerShares DB US Dollar Index Bullish (UUP), which tracks the dollar against most of the world’s major currencies, we can clearly see why futures took a nasty hit. The day’s 24-cent jump looks small but has enormous global impact.
Note the breakout in UUP in October from a long consolidation. The consolidation took place after the index jumped from $22 to over $26 between August 2014 and March 2015.
This S&P 500 one-minute chart shows Thursday’s trading started lower and sold off at the close — a nasty day for all but currency traders who were long the buck or short other currencies.
This chart doesn’t show the 50-day or 200-day moving averages at 2,061.54 and 2,062.03, respectively (see Wednesday’s Daily Market Outlook), but they were crushed.
Conclusion
Thursday’s final sell-off may have been just institutional traders paring positions prior to the holidays. However, when everyone runs for the exit, there are only so many who will make it through.
If stocks are at the beginning of a decline and not the end, the next two weeks could turn into a bloodbath. Better to stand aside until this settles down, unless of course, you are adept at short selling.
See prior charts of the major indices for support and resistance lines and moving averages.
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.
