Monday, August 31, 2009

Weakness in China and Among Materials Stocks: Important Intermarket Theme

With China (FXI; top chart) well off its early August highs, note the relative weakness of Basic Materials companies today and on a one-week basis per the excellent FinViz site. If growth in China is slowing down, demand for raw materials should weaken--and that puts a drag on a sector has been a leader since the March stock market lows.


meques said...

today we saw modest declines of AIG, C, FNM & FRE. And here is one of consequences. TRIN after being extremely bullish during two previous sessions on thu & fri, today was extremely bearish, oscillating near 1.7 all the session long.

Just want to quote from Bob Pisani’s Friday post: “I have noted all week that four stocks--AIG, Citi, Fannie Mae and Freddie Mac have accounted for 20 to 30 percent of the volume at the New York Stock Exchange. If you remove these stocks, volume has been VERY LIGHT. And prices? They have essentially moved sideways.”

That’s exactly what we have seen today. After 1st 30 minutes of the session volume have contracted until last 15 minutes after the closing bell to an average of -23.7% (without 1st 30 minutes) (-20.7% including 1st 30 minutes). Chart nicely illustrates it.

Brett Steenbarger, Ph.D. said...

Great observations, Meques. The light volume is indeed ultralight when we factor out the volumes in those few stocks. Very little movement in midday when that occurs; easy to overtrade--