Market Morning Huddle – Global Slowdown Fears – 8 Feb 2016

News Driver: Global economic slowdown continues to worsen. Investor fear is rising and VIX levels remain elevated.

$VIX as measured by VXX short term VIX futures is set to open higher this morning with a 27.50 reading nowhere near a panic level but a good measure of the overall concern in the markets.

U.S. stocks are coming off Friday’s massive tech-led selloff that pushed the Nasdaq to its lowest close since October 2014. Tech stocks were again among the top losers in pre-market trading on Monday.

S&P Futures: -1.2%
Nasdaq Futures: -1.9%
Dow Futures: -1.1%
Oil Futures: -1.5%

Today’s action is a STRONG FORM RISK OFF (higher risk assets being sold with money flows to defensive assets) it is transitioning to a weaker-form risk off as we get closer to the cash open of 9:30am EST. Markets have formed a base and moved up slightly.

2016-02-08_nq-futures

S&P 500: It may seem like the markets are “breaking down” here however, pre-market action on the S&P 500 is negative (-1%) but holding support and basing. There is leadership on the down-side from momentum spaces (Nasdaq 1.7%), however the Russell2K is down in tandem with the S&P 500. As we get closer to the 9:30am (EST) open equity markets are decelerating in their declines.

Anticipate the S&P 500 to open below major support of 1,880-1,870 but hold above 1,850-1,842 with better odds of re-gaining a foot hold above 1,880-1,870 this week, the market remains setup for higher attraction to higher risk spaces and departure from defense in the short-term but we know that in the long-term markets have broken long-term up-trends.

TSX: likely to remain under resistance of 12,810-12,755 but likely hold support of 12,547-12,497

Bonds/Gold: Gold is up 2.1% as fear and the flight to safety trade is on. Gold is expensive on a relative basis and has become extended in the short term.

TLT is up +0.91% (8:01am) as the markets are set to open strong form risk off and lower risk assets catch a bid. Bonds are dislocated and expensive versus Equites but are likely to continue to outperform stocks as the market struggle.

Oil: $29.74 (7:56AM): Levels to watch are $29.38 support. Oils has broken down again hourly support is around $29. If that breaks a move to the lows (or a new low) is likely.

Economic Calendar: Nothing of major significance today. Wednesday at 10am Yellen give a speech

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

Earnings: Todays stock to watch are Hasbro $HAS, Yelp $YELP and Twentieth Century FOX $FOXA

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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