Day 2 of 2022 brought volatility with a split personality, the Dow closed at record highs while the NASDAQ sold off. Deja vu the 4800 on SPX and $180 on AAPL after $182.86 8$3 trillion market cap. Oil bounced strongly after OPEC+. On the speculative end we saw Cryptocurrencies down again. Treasury market steepening in the yield curve continue today driven by selling pressure at the back end. After yesterday’s 10-year yield rise was the largest first day jump since 2009 the yield increased four basis points to 1.67%.
Enjoy live commentary from Our Trading Room at YouTube as the day wraps up – feel free to like and share
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In today’s post market wrap live from the trading room traders discuss the patterns through the options and futures markets that have played out perfectly from last week to today. Listen to our technical and market psychology read on the day. Join the Traders Community Podcast crew @traderscom @knovawave @Mahdavi4 plot out 2022.
Market Closes
- WTI crude futures settled +1.3%, or $1.00, to $77.00 per barrel.
- February Nymex natural gas (NGG22) closed down by -0.098 (-2.57%).
- The outlook for warmer-than-normal temperatures in the U.S. later this month was lower. Atmospheric G2 on Tuesday said that near-normal temperatures are expected across the central and western U.S. from Jan 9-11.
- BNEF data showed gas flows to U.S. export terminals Tuesday were up +13.9% y/y at 12.3 bcf, modestly below the Dec 19 record of 13.1 bcf.
- The dollar index on Tuesday rose +0.054 (+0.06%) a 1-1/2 week high as higher T-note yields supported the dollar. Weakness in the yen supported the dollar as USD/JPY surged to a near 5-year high.
- AUD as the strongest of the major currencies, the JPY was the weakest.
- Gold futures settled $14.50 higher (+0.8%) to $1,814.60/oz
- March silver (SIH22) closed up +0.246 (+1.08%).
- The Dow industrial average closed +214.57 points or 0.59% at 36799.64 for a new record close. Intraday, the price it reached a new all-time record high 36934.84. The index 2/2 for record closes in 2022.
- S&P index closed down -3.04 points or -0.06% at 4793.53 after closing at record level yesterday. Intraday, a new intraday high was reached at 4818.62
- NASDAQ index fell -210.07 points or -1.33% at 15622.73.
- The weak outperformance of the Nasdaq fueled by Vanguard Mega Cap Growth ETF (MGK 260.20, -3.27) fell 1.2%. The iShares Biotechnology ETF (IBB 148.29, -4.08) fell 2.7%. The ARK Innovation ETF (ARKK 92.69, -4.30) fell 4.4%.
- Russell 2000 rose to 2,268.87 +1.05%+23.56
- NYSE Adv 1670 Dec 1614 Vol 950.3 mln
- Nasdaq Adv 1857 Dec 2637 Vol 5.0 bln
- Apple 179.70▼ 2.31 (1.27%)
- The obsession of Apple hitting 3 trillion market at $182.86 was achieved (182.94 high)
- Bitcoin weaker at 45990
- France’s CAC, +1.3%
- German DAX, +0.7%
- Italy’s FTSE MIB +0.4%
- Spain’s Ibex +0.6%
- UK’s FTSE 100, +1.5%
Cboe Daily Market Ratios:
S&P 500 sector watch:
- Six of the 11 S&P 500 sectors closed lower
- Energy sector (+3.1%) financials (+1.2%) and information technology (+1.2%) S&P 500 consumer discretionary sector rose +.8%,
- The materials (-1.4%), health care (-1.0%), and real estate (-1.0%) sectors each declined by at least 1.0%.
Markets YTD
- Dow Jones Industrial Average +1.3% YTD
- Russell 2000 +1.1% YTD
- S&P 500 +0.6% YTD
- Nasdaq Composite -0.1% YTD
Bonds
- In the Treasury market the 10-yr yield increased four basis points to 1.67% while the 2-yr yield decreased two basis points to 0.76%. The U.S. Dollar Index increased 0.1% to 96.28. The10-yr yield has now risen 16 basis points start the year.
News Highlights
OPEC+ reaffirmed an agreement to increase output by 400,000 barrels/day in February, which was expected.
Job openings decreased to 10.562 million in November from a revised 11.091 million (from 11.033 million) in October.
December Manufacturing ISM Prices Index Fell Sharply, Is Inflation Peaking? – TRADERS COMMUNITY
The ISM Manufacturing Index for December came in at 58.7% under the consensus 60.3% and 61.1% in November. Of note was the Prices Index falling to 68.2% from 82.4%. Price pressures mellowed, are still alleviated but a sharp pullback. The assumption is improved supply chain conditions; the question is does the Omicron variant bring the gains undone, or become deflationary with demand destruction? January will be illuminating.
Into The Vortex – EIA Reports -136 Bcf Draw in Natural Gas Storage – TRADERS COMMUNITY
Heading into Christmas and cold temperatures around us gas withdrawal season is in swing. While in Europe natural gas futures are back to near all-time highs again US natural gas futures are softer reacting to domestic weather models. Last week EIA reported a draw of -136 Bcf of working gas in storage lower than expected. With the global energy crisis LNG exports continue to grow but we balance supply shortages with deliverability.
Looking ahead:
ADP Employment Change report for December, the FOMC Minutes from the December meeting, the preliminary IHS Markit Services PMI for December, and the weekly MBA Mortgage Applications Index on Wednesday.
Trust you all had a great day, sleep well and get your trading plan sorted.
Any questions please feel free to ask them below. Trade Smart!