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S&P 500 Clinging to 2015 Gains, Splashed Again With Volatile Oil

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December 30, 2015

The S&P 500’s (SPX) fight for 2015 gains continues. The bullish spirit took hold in Tuesday’s session, driving the SPX to a 0.8% gain for the year, but the stock market is having trouble with momentum this week—a lower open is expected for Wednesday, again largely at the mercy of oil’s move.

The year that many commodities traders may want to just end already has two trading days remaining. Markets are closed on Friday for New Years. So with the clock ticking, the Dow Jones Industrial Average ($DJI) is down 0.6% in the year to date, while the tech-heavy NASDAQ Composite (COMP) is up 7.9%.

Holiday-thinned volume could continue to skew broad-market direction. Instead, traders may want to focus sector-by-sector and name-by-name for potential signals of stock demand in early 2016. Look for solid volume to potentially confirm staying power in select stocks. But impact could also be felt from sellers looking to lock in profits or harvest losses for tax purposes. 

SPX stock index

FIGURE 1: HUGGING THE FLAT LINE FOR 2015.

The S&P 500 (SPX), plotted here on the thinkorswim® platform, turned positive for the year with Tuesday’s gain. Can it hold? for the year as the final trading days of 2015 wrap up. Data source: Standard & Poor’s. For illustrative purposes only. Past performance does not guarantee future results.

Oil: Hard Fought Gains at Risk. Bruised oil futures had chiseled out a run of near-term gains but that advance looked at risk once again with both New York-traded crude and London-listed Brent down over 2% each early Wednesday. The driver? Last night’s American Petroleum Institute (API) data showed U.S. crude inventories rose 2.9 million barrels in the latest week against widespread industry analyst expectations for a decline. Later today, we’ll get the official Energy Information Administration data, which The Wall Street Journal predicts could show a 1 million-barrel decline in inventories. Crude and natural gas had gained in Tuesday’s session and into the evening after-hours markets on prospects for colder North American weather.

Some Happy Investors? Even as broad stock averages wait for their yearly result to sort out, two big movers captured the market’s attention this year. It was a record-breaking 2015 for Amazon.com (AMZN) and Google parent Alphabet (GOOGL, GOOG). The action leads some to speculate that they’ll be the next tech names to join the blue-chip DJIA. On Tuesday, AMZN, up some 125% this year, hit $696.44 at one point and closed at $693.97 to top its Dec. 1 closing record of $679.06. GOOGL, up some 45% year to date, traded as high as $798.69 Tuesday.

New Year’s Cheer? International Monetary Fund Managing Director Christine Lagarde wrote a guest column for Germany’s Handelsblatt newspaper. In it, she warned that global economic growth will be “disappointing and uneven in 2016.”

Good Trading,

JJ

@TDAJJKinahan

Swim Lessons: Dive In

Learn from the platform pros with a rotational schedule of daily Swim LessonsSM on the thinkorswim® platform. Today: 2015 Takeaways

JJ Kinahan

JJ began his career in 1985 as a Chicago Board Options Exchange...

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