Market Lab Report - Premarket Pulse 1/8/16
Major averages continued their free fall on higher, above average volume. Volatility levels remain elevated but be mindful of a sharp bounce. The put-call ratio spiked higher on Thursday which, while not at all perfect in calling market lows to the day, adds to the odds that today's bounce, though seemingly weak for now on the basis of where global markets are trading at the time of this writing, may strengthen.
The closely watched Chinese Shanghai Composite finished higher though the bounce was anemic relative to the correction it has had over the last several days as it finished up just shy of 2%. The ban on selling by large stakeholders was lifted after a 6 month trading restriction, according to news items on Bloomberg. Analysts estimated the ban, one of the many bailout measures introduced during the summer stock crash in China, could cause large shareholders to sell as much as $152.96 billion in stock. While it contributed to Monday's steep sell-off on the Shanghai, concerns about the devaluing yuan caused the Shanghai to hit its 7% circuit breaker both on 1/4 and 1/7. That said, China has suspended its circuit-breaker rule as it has been suggested that it contributes to more, not less, volatility in their markets. Thus the Shanghai Composite, if it wishes, is free to free fall. Its downtrend remains intact though the bounce could continue in the coming days.
US futures are currently up more than 1% at the time of this writing after the Bureau of Labor Statistics announced a stronger-than-expected 292,000 jobs in December vs. expectations of 200,000. European markets are trading slightly higher, a further indication the bounce may be weaker than expected.
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