Oil falls through the floor, stocks follow

 

After a losing session on Tuesday, stocks are falling again this Wednesday morning. The culprit this time — in addition to simple fear — was a comment from the International Energy Agency (or IEA) which warned that there was not enough demand, nor enough production cutbacks, to offset the huge amount of Iranian oil about to be dumped on the market, and that the oil market could “drown in oversupply.”

This fear, which has been steadily growing since the US made a deal with Iran that would lift sanctions and allow the nation to sell its oil on the open market, has now become powerfully acute. West Texas Intermediate crude has fallen all the way to $27.88. World markets reacted negatively, with the Shanghai Composite losing 1% and all major European indices losing about 3%. Adding to the eschatological tone, IBM (IBM) announced worse than expected fourth quarter results, which included an 11.9% drop in revenue from 2014 to 2015.

At present, the S&P 500 is down 2.1%, the DJIA is down 2%, and the NASDAQ is down 2.4%.

Here are your Wednesday morning market metrics. Industries doing well today include airlines and electronic equipment. Industries showing weakness include construction & engineering, IT services, and internet software. The VIX is down 1% to 26.05 after closing on Tuesday at 27.02. The most actively traded equity options are for the SPDR S&P 500 ETF (SPY) with 25K Jan-29 180 puts hands. The total put-call volume ratio as of 9:00 AM was 1.75 (293,340/514,673). NYSE Adv/Dec 270/2,509. Nasdaq Adv/Dec 253/1,941.

Symbols: IBM SPY
Julian Close

Julian Close

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 see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.

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