Stocks: A Quiet Session Probably Reduces Vulnerability of Prices
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Global equity markets overnight were mixed without respect to geographic pattern. Overnight economic news of importance included Chinese manufacturing PMI for December which came in slightly above expectations and Chinese non-manufacturing PMI for December which came in slightly softer than expected. The European session will be very quiet as many nations will be celebrating their New Year's Day holiday today. There are no US or Canadian economic numbers on today's schedule.
S&P 500: While there was not a definitive track thrown off by international equity market action overnight, the charts in the S&P have shifted negative, with a 4 day low early today. While the market has maintained a generally positive track this week in the face of the omicron explosion, the focus of the trade today could be year-end position squaring. However, we are surprised that the market has been able to discount soaring infection rates and avoid regular tax selling. On the other hand, the potential for higher tax rates in 2022 should prompt a portion of those with large profits (from the historic 2021 rally) to bank those profits! Key support today is seen a 4750.50 and to turn the tide back in favor the bull camp might require a rally back above 4782.25.
Other US Indexes: Like the S&P, the Dow futures are also tracking lower with a 3-day low in the early trade. With increased prospects of a "stay-at-home" start to 2022 and the inability to rally off positive jobs data yesterday, the bear camp has an edge. We see a key pivot point today at 36,280, with a failure signal seen with a trade below 36,167. Not to be left out, the NASDAQ has also forged a 4-day low overnight with the charts giving off the impression of a "breakdown". In a slight indirect negative for the NASDAQ, Tesla is reportedly recalling 500,000 electric vehicles over safety concerns. In another indirect negative to the NASDAQ the CDC has advised against taking cruises due to the omicron case surge. We see key pivot point pricing today at 16,457 and a major failure taking place with a dip below 16,350.
TODAY'S MARKET IDEAS
Obviously, the bear camp has a slight edge to start the last trading session of the year. The bulls hope that sharp gains in the markets this year will discourage year-end profit-taking and with the build back better legislation stalled the fear of higher taxes in 2022 is moderated.
