Market Overview

Low Volume Marks Seasonal Trading; Stocks Struggle Early On

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Direction appeared to be an issue in the early going as stocks struggled to gain footing in the seasonally tight trading session.

The three major benchmarks floated in and out of positive territory ahead of the market’s open following Tuesday’s weak showing. If the session ends in negative terrain, it would mark the first three-day fallback since late September. Volume is typically low in the week between Christmas and New Year’s, and could cause volatility. But remember this: Low volume or not, the markets have scored 62 all-time highs this year—well surpassing the average of 29 since World War 11.

The lowest-performing S&P sectors this year have been energy and telecom. Movement out of momentum trading and into value trading could point to some rebalancing in those two sectors, according to some market analysts.

Reports that might be interesting to watch today include consumer confidence and pending home sales. Home prices apparently are ramping up, according to a recent report. (See below.) Some economists have projected that sales of homes signed, but not closed, will be higher with today’s report.

Boeing (BA) shares climbed 1% in early trading. The plane maker said it has four Dreamliners on order from Morocco’s Royal Air Morac. The price tag: $1.1 billion per plane.

Retail stocks were on fire yesterday. MasterCard Advisors’ (MA) SpendingPulse report showed that holiday sales were 4.9% higher than they were a year ago. E-commerce sales surged by 18%, the report said, to help set a record in dollars spent. Thirteen retail stocks, including Kohl’s Corporation (NYSE: KSS), Gap Inc. (NYSE: GPS), Best Buy Co Inc (NYSE: BBY), Lululemon Athletica Inc. (NASDAQ: LULU) and American Eagle Outfitters (NYSE: AEO), hit fresh 52-week peaks.

That apparently wasn’t enough, however, to push the benchmarks into positive territory. Low volume might have been the culprit. But some market analysts blamed the slightly downward trading throughout the day on Apple’s (AAPL) 2.5% pullback. That cut about 30 points from the price-weighted Dow Jones Industrials ($DJI) and probably helped drag down some other technology stocks and the tech-heavy Nasdaq Composite (COMP). Both ended off 0.3% while the S&P 500 (SPX) slipped 0.11%.

Supply disruptions in the Middle East and Europe might have helped push crude oil prices over the $60-mark in intraday trading to tap a 52-week high Tuesday. That’s an important resistance level that some analysts have been closely watching. Per-barrel prices for West Texas Intermediate (/CL), the U.S. benchmark, closed at $59.80. (See chart.) Oil prices declined slightly in the early going. Gold prices edged up a tad after finishing Tuesday’s session at a four-week high of $1,287.80.

Treasury yields were off a bit early on. The 10-year yield was at 2.47% while the two-year yield stood at 1.91%. As noted many times here, a flattening curve, which some market analysts say has historically pointed to economic weakness, could continue to bear watching in the new year.

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FIGURE 1: CRUDE TAPS 52-WEEK HIGH. Supply disruptions in the Middle East and Europe could have helped push crude oil prices to a fresh peak Tuesday. West Texas Intermediate (/CL) crude oil prices tipped over the $60-mark per barrel but lost some momentum in early trading today. Data sources: CME Group, Standard & Poor’s. Chart source: The thinkorswim® platform from TD AmeritradeFor illustrative purposes only. Past performance does not guarantee future results.

Housing Market Trends

The latest, according to the S&P Core Logic Case-Shiller report out Tuesday, shows that home prices are on an upward climb. The National Home Price Index rose 0.7% in October after an upwardly revised 1% rise in September, according to the report. The biggest price hikes were seen in West Coast markets but the report added that there were notable price gains in Charlotte, Dallas and Tampa. Overall, there’s been an 8.2% annualized price rise over the last three months.

“While home prices have rebounded past their previous highs in nominal terms, they remain lower after adjusting for inflation and rents,” according to Wells Fargo’s Economic Report. “In our view, talk of another bubble is still premature.”

The Gift Card Waste

Why aren’t we using all those gift cards? According to CEB TowerGroup, consumers spend more than $130 billion on gift cards each year. But roughly $1 billion—with a b—are left in drawers, wallets or, possibly the garbage, and unspent.

“There’s nothing worse than having a bunch of gift cards in your pocket you aren’t going to use,” Eddie Alberty, vice president of Strategic Partnerships at e-commerce site Market America and Shop.com, told MarketWatch. There’s a solution: Tap into a growing number of apps and online exchanges that allow people to buy gift cards at a discount from the store price.

Hey Wearable Devices, What’s My Temperature?

Technology companies are jumping into the healthcare space with continuous-monitoring tools like apps for watches and smartphones that might eventually help reduce disease and prolong lives, according to the New York Times. Ten of the largest U.S. tech companies shelled out $2.7 billion for healthcare-equity deals in the first 11 months of this year, data from research firm CB Insights showed. That’s up from the $277 million the industry spent in all of 2012, the Times piece said.

“We’re in the early stages of learning these tools: Who do they help? Who do they not help? Who do they provide just angst, anxiety, false positives,” Dr. Eric Topol, a digital medicine expert who directs the Scripps Translational Science Institute in San Diego, told the Times.

Information from TDA is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade.

Posted-In: TD Ameritrade The Ticker TapeNews Commodities Retail Sales Markets

 

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