Oil & Stock Market Dance Continues

As oil prices continue lower the stock market moves lower with it. That’s been the tune being played throughout January thus far. Monday oil prices fell sharply once again and stocks overall followed the action lower as if attached at the hip.

It’s going to be a significant week for bulls and bears alike. There will be a heavy amount of economic data, earnings and whatever the Fed does or doesn’t do will lead investors in one direction or another as January ends.

The lone economic indicator Monday was a recession/depression report from the beleaguered oil patch; as the Dallas Fed Manufacturing Survey fell to -34.6 vs prior -21.6.

Earnings this day featured a rare “sell” downgrade from Goldman Sachs for Caterpillar (CAT), down 5%. We’ve been posting how weak the company’s sales have been globally. Homebuilder D.R. Horton (DHI) reported weaker revenues, down nearly 5% as well. The only winners of note were McDonalds (MCD) and Walmart (WMT).

Bulls and their spokesmen are desperately driving investors to remain in markets or “buy, buy, buy” as product sponsors worry over fee income now at risk.

After last week’s oversold short-squeeze, it’s right back down we went Monday.

Market sectors moving higher included: Volatility (VIX), Gold (GLD), Gold Stocks (GDX), Silver (SLV) and Treasury Bonds (TLT).

Market sectors moving lower included: Everything else.

Below is the heat map from Finviz reflecting those ETF market sectors moving higher (green) and falling (red). Dependent on the day (green) may mean leveraged inverse or leveraged short (red).

 Volume was slightly lower Monday but breadth per the WSJ was quite negative once again.

This short commentary is necessary since the week is young and a lot can change this week. Perhaps I’ll stick with short commentaries until Wednesday after the Fed Meeting results are in.