Market Morning Huddle – 2 Feb 2016 – Oil Crumbles

News Driver: North American markets set to open lower again today. Oil continues to be driving the markets with WTI currently down (-4%). Overseas earnings misses from major Oil player BP and UBS also shook the confidence of the markets.

(8:23am)
S&P Futures down 0.8%
Nasdaq Futures down0.8%
Dow Futures down 0.8%

Today’s action is a WEAK FORM RISK OFF (higher risk assets being sold defensive assets out-perform). Emerging markets closing in mixed leaning risk-off. Eurozone in the red with the DAX -1.4% and Euro Stoxx 50 -1.8%

2016-02-02_futures

MID-LONG TERM (Weeks-To-3Months+): Bearish

The situation remains precarious the markets. If the S&P 500 breaks back below 1,880-1,870 (a key support floor), and if the Crude Oil (WTI) reverses back below $30 aggressively. This market has more downside risks than upside potential in the mid-to-longer-term. Look to De-risk long positions with rallies unless you can stomach the volatility. We may very well look back at this time as the start of the Bear market. Be ready for anything.

SHORT TERM (Days-To-Weeks): Bullish

We enter the week with a HOLD on short term Swing and Positions trades. If the S&P 500 breaks 1928-1921 (support) a move closer to SELL for shorter term positions is a good idea. A break below 1880-1870 for the S&P 500 suggests the “bounce” is in jeopardy and likely over and a move to de-risk is the better option.

Reviews yesterdays Market recap to see where the market may go from here –

S&P 500: Pre-market the S&P 500 is down -0.8% with the Nasdaq holding up better -0.4% but the Russell 2K lagging -1.1%. Nasdaq is out-performing if it starts to lag look for the downside action to accelerate.

TSX: Under-perform as Canada’s heavily weighted energy sector will be under pressure again. Levels to watch are 12,810-12,755, with better odds to hold above support of 12,547-12,497.

Bonds/Gold: Defensives like Bonds are getting a bid however they remain relatively expensive (TLT +0.7%); Gold is holding flat under its 200 Day SMA with better odds to weaken if the S&P 500 is able to hold support of 1,928-1,921 in today’s trade

Oil: $30.38 (8:44AM): Key support levels are $30 and $29.28 on the hourly chart. Oil is weaker again, testing the limits of support  currently -4%; and Volatility has risen +2.8%

Economic Calendar: API weekly crude data released at 9:35pm EST

For a review of the rest of today’s economic data visit the economic calendar here.

Earnings: Stocks to watch include Yahoo $YHOO, Pfizer $PFE, Exxon Mobil $XOM, Gilead $GILD and Michael Kors $KORS

For a complete list of today’s earnings visit the earnings page on our site.

About the Author Dave Gagne

Founder of MarketInsidersClub.com. President and CEO Dynamic Wealth Financial Inc. Author of Trading Master Plan Subscribe to the MarketInsidersClub Youtube Page here

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  • Pat says:

    Dave,
    Some good comments and I enjoy the letter. keep them coming.

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