Week 52/01 Recap – Shaky Start to 2014
Monday’s session did not generate much excitement as the S&P 500 ended flat after spending the entire trading day inside of a four-point range. Interestingly, while the S&P 500 was challenged by its flat line throughout the session, the Dow Jones Industrial Average held just above its unchanged level for the duration of the day. The price-weighted Dow saw 19 of its 30 components finish in the green, but shares of Disney (DIS 76.11, -0.16) stood out with a 2.5% gain. The noteworthy strength ensued after Guggenheim upgraded the stock to ‘Buy’ from ‘Neutral.’
On Tuesday, the major averages wrapped up a memorable year with a forgettable final session. The S&P 500 added 0.4%, extending its 2013 price return to 29.6%. Given its banner year, it was appropriate for the index to end 2013 at a fresh all-time high of 1848.35. The Dow Jones Industrial Average soared 26.5% in 2013 and ended at a record high of its own. Although the Dow (+0.4%) and S&P 500 (+0.4%) saw comparable gains on Tuesday, the Nasdaq (+0.5%) fared a bit better. That was the theme throughout the year as the tech-heavy index rallied 38.3%.
Bond and equity markets were closed on Wednesday for New Year’s Day.
On Thursday, the S&P 500 exhibited a bit of a hangover in its first session of 2014. The benchmark index fell 0.9% as all ten sectors registered losses. Stocks were pressured from the opening bell as cautious action in Europe weighed on the early sentiment. In all likelihood, the slide caught a number of participants off guard given the understanding that the first few days of a new year are known to have a favorable bias with inflows into IRA accounts, bonus money being put to work, and new money coming off the sidelines. That did not happen today as sellers maintained control throughout the trading day. Energy (-1.3%), industrials (-1.3%), and technology (-1.1%)—slipped behind the broader market at the open and their underperformance weighed for the remainder of the session.
On Friday, the major averages wrapped up the week on a mixed note as the Dow Jones Industrial Average added 0.2% while the Nasdaq shed 0.3%. For its part, the S&P 500 ended flat. Friday’s mixed finish was an appropriate reflection of a session that featured some mixed signals. On that note, seven of ten sectors ended in the red but market breadth remained positive throughout the trading day. In all likelihood, light volume played a part as some participants were kept away by the winter storm that has encompassed the Northeast. At the end of the day, only 533 million shares changed hands on the NYSE floor.
The markets lost between 0.1% to 0.6% for the last 5 days of trading. VIX has gained by 10.43% to close at 13.76. The bull run for 2013 set the VIX to be between 12 to 15. For the bears to come out, the VIX needs at least be at 15.
Leadership in the week was seen in Financials and Consumer Discretionary, with both cyclical sectors gaining 0.46% and 0.11%. On the other hand, Utilities, Energy and Consumer Staples lost between 1.10% to 1.43% to round up the laggards for the week.
Macronomics Data for next week :
The first 2 trading session of the year started off with a brearish note. Not surprising considering 2013 was a very profitable year and some profit taking to take place this week. Moving into the Week 02, we should be seeing further downside before finding support to rebound.
Market Call Week 02 : DOWN