Bipolar Stock Market Cracks After Manic Morning

After the S&P 500 hit a new record intraday high at 9:37, the stock market sank into the red as all the major indices went negative at 11:17.

Wednesday was a bipolar day for the stock market. A number of reports pointed out that the Chicago Board Options Exchange Volatility Index (VIX) spiked to 21.26 on Wednesday morning, although the reading was later explained as a “misprint”. Was it really a signal that the manic market was about to have an erratic mood swing?

At 11:17 all three major stock indices headed into the red, where they spent the rest of the day – although the Nasdaq 100 was about ten minutes late. Did somebody say something on CNBC? The slightly-disappointing ADP National Employment Report for October had already been released at 8:30 and the unsurprising FOMC Statement was not released until 2:00. The S&P 500 hit a new record intraday high at 9:37 although once the meds wore off, the party was over.

The Dow Jones Industrial Average (DIA) lost 61 points to finish Wednesday’s trading session at 15,618 for a 0.39 percent decline. The S&P 500 (SPY) fell 0.49 percent to 1,763 despite hitting a new record intraday high of 1,775.22 at 9:37.

The Nasdaq 100 (QQQ) declined 0.19 percent to finish at 3,385. The Russell 2000 (IWM) sank 1.39 percent to 1,105 despite hitting a new record intraday high of 1,123.26 at 9:35. Quite the Negative Day on Wall Street

In other major markets, oil (USO) sank 1.58 percent to close at $34.85.

On London’s ICE Futures Europe Exchange, December futures for Brent crude oil advanced 91 cents (0.83 percent) to $109.82/bbl. (BNO).

December gold futures declined $2.50 (0.19 percent) to $1,343.00 per ounce (GLD).

Transports failed to get anywhere near the loading dock on Wednesday, as the Dow Jones Transportation Average (IYT) fell 0.60 percent.

In Japan, the exchange rate for the yen continued to be the dominant factor in stock market activity. Stocks made a significant advance on Wednesday as the yen weakened against the dollar. A weaker yen causes Japanese exports to be more competitively priced in foreign markets. The yen weakened as far as 98.25 per dollar during Wednesday’s trading session in Tokyo (FXY). The Nikkei 225 Stock Average jumped 1.23 percent to 14,502 (EWJ).

Stocks surged in China following reports that the Central Committee of the nation’s Communist Party will be planning new financial reforms at its meeting, which runs from November 9-12. The Shanghai Composite Index soared 1.48 percent to close at 2,160 (FXI). Hong Kong’s Hang Seng Index skyrocketed 2.00 percent to end the day at 23,304 (EWH).

In Europe, stocks made a modest retreat as earnings reports were mixed. Mobile phone company, Belgacom sank 5.3 percent The Euro STOXX 50 Index finished Wednesday’s session with a 0.33 percent decline to 3,040 – remaining above its 50-day moving average of 2,905. Its Relative Strength Index is 64.37 (FEZ).

Technical indicators revealed that the S&P 500 remained above its 50-day moving average of 1,694 after finishing Wednesday’s session with a 0.49 percent advance to 1,763. Its Relative Strength Index fell from 70.53 to 65.97. The MACD is now on a level trajectory above the signal line, suggesting the likelihood that the S&P 500 will remain near 1,763 during the immediate future.

For Wednesday, all sectors finished solidly in negative territory. The consumer staples sector took the hardest hit, with a 0.86 percent decline.

Consumer Discretionary (XLY): -0.49%

Technology: (XLK): -0.19%

Industrials (XLI): -0.45%

Materials: (XLB): -0.61%%

Energy (XLE): -0.61%

Financials: (XLF): -0.38%

Utilities (XLU): -0.64%

Health Care: (XLV): -0.53%

Consumer Staples (XLP): -0.86%

Bottom line: Wednesday brought us a truly insane, bipolar trading session. Within two hours of hitting a new record intraday high, the S&P 500 fell into the red (with the other stock indices) for no apparent reason – other than the fact that the market was overbought.

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