There's no need to point the finger because it's pretty much one sided action today. Action seen today is simply a "massacre"! So yes, it's that ugly! Unfortunately, there was really no warning to the extent, but the damage in shippers, solars and the other days Steel earnings 'cook in', were probably indicators more than we'd like to admit. Even the early "Shale" excitement was pushed aside as collateral damage spread out into just about every part of the equity market by the afternoon. Yes, the "all mighty exuberance", should have been sold into considering the sickness seen in the market. Almost nothing can withstand such selling, everything becomes vulnerable, especially any momentum...speculation plays. Generally, we feel people were dumping stuff indiscriminately before the long weekend, and perhaps, before the employment report tomorrow. Some may blame the expected ECB hike or the weakness in coal price as the catalysts for the commodity selloff. We think, regardless the reason, someone(s) out there were ready to dump lots of commodity related shares onto the market. Is it profit taking or is it something else?. We don't know because there's literally a million reason to sell a stock and we're not about investigate. So in conclusion, commodity plays were taken down hard and if we remember correctly, this is the biggest single day carnage for CRX this year. It closed at 918, our last note said,.."those dominos we speak of in full effect.", the CRX was around 955. The " big way...domino effect including commods", noted yesterday came today.! It was on the mind and unfortunately it happened. Hopefully, we are all still standing!. Action like today makes us weary to buy anything. Traders may have an opportunity to trade Friday, others should just stay out!
As for the rest of the market, the story got uglier and helped push the commodity massacre. This is the week we are supposed to wave our respective national flags to celebrate. Instead, people are waving a white flag to this troubling stock market. It's just very unsettling to see the broad market action, even if we've stayed out of the trouble the entire year so far.
What is DJIM looking for at this moment? A relaxing weekend...simply!. We'll look for any changes in sentiment toward the commodity sector next week, Friday will be irrelevant in our minds. Unfortunately, despite today's massive sell off, we just can't draw a firm conclusion on the sector. Until positive sentiment returns, we are calling this a severe correction for the commodity sector. Sell offs like today take sometime to recover and before we even think about stepping back in, we need to see some stability first.
Tomorrow's employment report may be a catalyst in either direction and we'll watch for development closely as traders only. We are most likely to stay very quiet the next couple of trading days.