Courtesy of John Nyaradi.

The trend of stock market selloffs during the last hour of trading continued into a second week on Monday.

Monday brought us another late-day stock market selloff, as the S&P 500 headed into the red at 3:25.  Although the Dow Jones Industrial Average and the Nasdaq were already in negative territory by then, at 3:25 they both made abrupt declines.  The trend began on Monday, November 25 and has continued since that time.  This new pattern is the inverse of what we saw during the “glory days” of the quantitative easing program in the summer of 2009, when stocks would abruptly begin climbing at approximately 3:30.  Suspicious minds are focusing on the trading algorithms used in HFT (high-frequency trading) computers.

Stocks had advanced earlier in the day after the Institute for Supply Management reported that its November 2013 ISM Manufacturing Report on Business indicated that the manufacturing PMI jumped to 57.3 percent in November from October’s 56.4 percent.  Economists were expecting a decline to 55.2 percent.  Because the ISM manufacturing PMI directly correlates with America’s real GDP, the report boosted expectations about fourth quarter GDP.  Markit Economics also reported a better-than-expected, final November U.S. Manufacturing PMI of 54.7, compared with October’s 51.8, beating the flash estimate of 54.3.  A result above 50 indicates expansion.

The Dow Jones Industrial Average (NYSEARCA:DIA) lost 77 points to finish Monday’s trading session at 16,008 for a 0.48 percent decline.  The S&P 500 (NYSEARCA:SPY) retreated 0.27 percent to close at 1,800.

The Nasdaq 100 (NASDAQ:QQQ) declined 0.19 percent to finish at 3,481 after reaching a high of 3,501 – a number not seen since October of 2000.  The Russell 2000 (NYSEARCA:IWM) sank 1.20 percent to end the day at 1,129.  Stock Trading Alert: Stocks Extend Short-term Consolidation

In other major markets, oil (NYSEARCA:USO) surged 0.66 percent to close at $33.68.  Will Strong Resistance Stop Oil’s Rally?

On London’s ICE Futures Europe Exchange, January futures for Brent crude oil advanced $1.79 (1.63 percent) to $111.68/bbl. (NYSEARCA:BNO).

February gold futures declined $31.40 (2.51 percent) to $1,219.00 per ounce (NYSEARCA:GLD).

Transports were in the express lane on Monday, with the Dow Jones Transportation Average (NYSEARCA:IYT) advancing 0.15 percent to $129.80, after reaching an all-time, intraday high of $130.78.

In Japan, the exchange rate for the yen continued to be the dominant factor in stock market activity.  Japanese stocks declined slightly on Monday as the yen remained relatively unchanged from Friday’s level during Monday’s trading session in Tokyo.  Twelve hours after the markets closed in Japan, the yen weakened to a six-month low of 103.3 per dollar.  A weaker yen causes Japanese exports to be more competitively priced in foreign markets (NYSEARCA:FXY).  The Nikkei 225 Stock Average dipped 0.04 percent to 15,655 (NYSEARCA:EWJ).

Stocks declined in mainland China, despite a better-than-expected “official” November Manufacturing PMI report from the National Bureau of Statistics and China Federation of Logistics.  The “official” PMI rose to 51.4, beating estimates of 50.8.  The HSBC China Manufacturing PMI dipped to 50.8 in November from October’s 50.9.  Many economists looked behind the headline numbers to point out that the data revealed that smaller companies are experiencing weakness and employment is getting soft.  The Shanghai Composite Index dropped 0.59 percent to 2,207 (NYSEARCA:FXI).  Hong Kong’s Hang Seng Index surged 0.66 percent to end the day at 24,038 (NYSEARCA:EWH).

Stocks declined modestly in Europe, despite a better-than-expected final report on November Eurozone Manufacturing PMI from Markit Economics.  November’s manufacturing PMI increased to 51.6 from October’s 51.3 and the “flash” reading of 51.5.  A disappointing report from Markit on Spain’s Manufacturing PMI squelched investor enthusiasm about the Eurozone report.  The Markit Spain Manufacturing PMI fell into the contractionary range in November, hitting a six-month low of 48.6 after October’s reading of 50.9.  Declining domestic demand was cited as the cause for Spain’s deteriorating business conditions.  The Euro STOXX 50 Index finished Monday’s session with a 0.30 percent decline to 3,077 – remaining above its 50-day moving average of 3,011.  Its Relative Strength Index is 57.98 (NYSEARCA:FEZ).

Technical indicators revealed that the S&P 500 remained above its 50-day moving average of 1,743 despite declining 0.27 percent to finish Monday’s session at 1,800.  Its Relative Strength Index declined from 65.86 to 62.65.  The MACD has just taken a dip below the signal line, which would suggest that the S&P will continue to retreat during the immediate future.

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