Another ugly day. Crude not finding a base, the North Korea nuclear test, and China set its currency fix lower. Take your pick.
Crude remains a major problem. We were in the middle of a midday rally going into noon, but another leg down in oil caused a predictable drop in energy, industrials, and materials.
This is three days in a row, and what is most remarkable is that the volume for all three days has only been modestly elevated. In other words, one of the hallmarks of a capitulation bottom—a volume surge—is not happening. Instead, we are getting a buyer's strike. When there is no interest in buying, moderate selling drops stocks notably until buyer interest perks up.
This is consistent with feedback I am hearing from trading desks: activity is not that high.
Regardless: you can go broke on low volume, as the old trader saw goes. There has been lots of technical damage in the first three days of the year. The Dow Transports hit a 52-week low, but several other indices are very close.
The S&P Mid Cap 400, where many airlines and home builders reside, is only 0.9 percent from a 52-week low, while the small-cap Russell 2000 is not far behind, 1.5 percent from a 52-week low.
The large cap indices have fared better, with the 6.5 percent away from new lows.
Not surprisingly, there was an expansion of new lows, with about 260 on the NYSE. Most of the new low damage, predictably, was in energy and industrials.
In short, 2016 looks a lot like 2015: sell commodity stocks and global Industrials, with buying (or much less selling) in consumer staples and health care. Bonds act well, dollar acts well.
I hated 2015.