Tuesday’s rally was forgotten on Wednesday as the decline in the price of oil and comments from Saudi Arabia on oil output pressured the energy sector and stocks lower.
The market direction outlook for Wednesday was for the possibility of stocks moving lower. In my comments I indicated:
“If oil should tumble further however, stocks will most likely give back some of the gains from today but not all.
The question now is with Santa finally in town, how long will he stay. We will know more on that on Wednesday by mid-afternoon.”
Advance Decline Numbers
Volume on Wednesday was the lowest so far this week with just 2.35 billion shares traded. 86% of all trades were moving lower. 70% of all stocks on the SPX were falling. However new highs were 45 and new lows 31 so the possibility of rally to start the new year does remain.
Market Indexes Closing Numbers
All indexes closed near their lows on Wednesday. The S&P closed at 2,063.36 down 15 on the day and below 2075 support. The Dow Jones closed at 17,603.87 down 117.11. The NASDAQ closed at 5,065.85 down 42.09.
Market Direction Outlook for Dec 31 2015
I have not included the technical chart for the final day of the year as I am spending my time updating trades for 2015 to close out the year and prepare for 2016.
My Market Direction Outlook for Wednesday indicated that by Wednesday mid-afternoon we would know more about how long Santa will stay.
In the mid-afternoon the market was weak but had recovered from the morning selling and was trying to move back toward the 2075 level. The largest selling was from 3:30 into the close which most probably was the computer trading programs.
The mid-afternoon saw some strength which I believe indicates the market will try for another rally either Thursday or to start the New Year off.
Oil took the wind out of the rally on Wednesday but as explained, it did not wipe out all the gains from Tuesday.
Thursday should start stronger than Wednesday. If the market opens higher than Wednesday’s close of 2063.36 we should see the market climb and end on a positive note.
As well the advance decline numbers still point to stocks trying to rally to start the new year off. That rally may be short-lived, but most of the trades I have entered last week are being closed now. A rally for the first couple of days will assist in getting trades closed.
Thursday is the final trading day of the year and volume will most likely be light again. This will assist if there is a move lower and keep any movement down checked. If the market does move higher don’t be surprised to see the close move sideways and give back some of any afternoon rally.
At the present time the Santa Claus rally is in jeopardy. There is still a good chance that if Thursday is sideways or ends with slight losses or gains, the rally can still happen for the first two trading days of 2016.
To start the new year, many analysts are looking for a large move lower in the first day or two. I am not.
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