China’s Shanghai Composite Index had its worst day since 2007 on Monday, falling more than 8% in an across-the-board rout. Other Chinese indices, including the tech heavy Shenzhen suffered similar losses. Since the Chinese market began to falter, earlier this month, the government has been acting frantically to stop its slide. Western investors, already familiar with various versions of this story, could only wait for the other shoe to fall, and the market has little for China today but a knowing shrug.
The problem is that as Chinese paper wealth disappears, it will put even greater strain on the nation’s banking system. That is likely to trigger waves—big waves—of selling, in anything and everything. US markets are staying ahead of that by ratcheting down a bit today. Oil continues to fall, but gold is moving back up. The dollar is losing ground against the Euro and the Yen.
At present, stocks are down. The S&P 500 is down 0.50%, the DJIA is down 0.74% and the NASDAQ is down 0.59%.
Here are your Monday morning market metrics. The industries showing strength today include Internet & Catalog Retail, Multi-Utilities and Electric Utilities. The industries showing weakness today include Capital Markets, Auto Components and Oil, Gas & Consumable Fuels.
The VIX is up 16.30% to 15.98 after closing Friday at 13.74. The most active options this morning is SPDR S&P 500 ETF (SPY) with 18,844 December expiring $165 puts changing hands. The total put-call volume ratio is 1.21 (560,117/461,582). NYSE Adv/Dec 721/2,136. NASDAQ Adv/Dec 560/1,847.
Julian Close became a stockbroker in 1995. In his 20 years of market experience, he has seen all market conditions and written about every aspect of investing. Julian has also written extensively on corporate best practices and even written reports for the United Nations. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. You can follow Julian’s daily hedged options trades and his unfolding market commentary via twitter: @JulianClose_MIC.