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Sarhan on CNBC: Dow, S&P off 1% as Europe plunges; oil eyed

Thursday 2,11.16
U.S. equities fell sharply Thursday as investors digested a massive global sell-off.
“The Chinese H share index didn’t wait until the mainland opening on Monday and closed overnight with a near 5% drop to a level last seen in March 16th 2009,” Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.
Trading in mainland China is closed this week due to the Lunar New Year Holiday.
The pan-European STOXX 600 fell 2.6 percent as banks in the region plunged, with Deutsche Bank dropping 4.7 percent and UBS falling 2.6 percent. On Wednesday, European banks soared, momentarily halting a massive plunge.
The sell-off in global equities sent traditional safe havens surging.
Gold futures for April delivery gained $43.80 to trade at $1,238.50, while U.S. 10-year note yields traded at 1.63 percent. The benchmark note yield also went below 1.55 percent momentarily.
“The central banks have lost control of the situation,” said Peter Cardillo, chief market economist at First Standard Financial. “If this continues, there’s real trouble ahead.”
The Dow Jones industrial average briefly fell more than 250 points, as Goldman Sachs weighed the most on the blue chips index. In midmorning trading, the Dow was about 190 points lower.
“I think you’re in a situation where the market in deeply oversold levels. … At some point, it’s got to bounce,” said Adam Sarhan, CEO of Sarhan Capital. “But make no mistake about it, the overall trend is down.”
The S&P 500 dropped more than 1 percent, as financial fell nearly 2.5 percent. The financial sector was on track for its first five-day losing streak since August.
“There’s a chance we break below the 1,800 level, and then the next level to watch is 1,775,” Cardillo said. “I think we could see a bounce there. Otherwise, we’re in trouble.”
The Nasdaq composite fell 0.5 percent, as biotechnology stocks and several technology stocks fell. The index was also about 1.5 percent away of entering bear market territory on an intraday basis.
Investors also kept an eye on falling oil prices, as WTI futures hit their lowest levels since 2003.
In midmorning trading, U.S. crude was 49 cents lower, or 1.7 percent, at $26.96 a barrel.
“As of yesterday, oil has moved 5 percent 24 of the 26 trading days this year,” said Art Hogan, chief market strategist at Wunderlich Securities. “That doesn’t happen. … That is more than we would see in an average year.”
On the data front, U.S. weekly jobless claims came in at 269,000, below estimates. However, “we’re ignoring the fact that there’s good news,” Hogan said.
U.S. futures fell sharply on Thursday, with Dow futures briefly falling more than 300 points. On Wednesday, stocks failed to hold a rally that lasted most of the session, as the Dow and S&P both closed lower.
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“Yesterday we had the perfect setup for a constructive day,” Hogan said. “And it all collapsed on us. Oil fell and everyone fell with it.”
“Volatility is going to be the norm, not the exception.”
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 28.5, after briefly hitting its highest level since Jan. 20.
Investors will also keep an eye on Fed Chair Janet Yellen, who is scheduled to testify for a second day in front of Congress.
On Wednesday, she said that, if the U.S. economy were to disappoint, the Fed would have to reconsider its rate hike path.
The Dow Jones industrial average traded 250 points lower, or 1.5 percent, at 15,665, with JPMorgan Chase leading decliners and Cisco Systems the greatest advancer.
The S&P 500 dropped 27 points, or 1.5 percent, to trade at 1,825, with financials leading all sectors lower.

The Nasdaq plunged 45 points, or 1 percent, to trade at 4,238.

The dollar fell 0.4 percent against a basket of currencies.
Decliners were about 5 steps ahead of advancers on the New York Stock Exchange, with an exchange volume of 126 million and a composite volume of 407 million as of 9:49 a.m. ET.
On tap this week:
Thursday
Earnings: CBS, KKR, FireEye, AIG, Activision Blizzard
10 a.m.: Fed Chair Janet Yellen testifies before Senate Banking Committee
1 p.m.: 30-year bond auction
Friday
Earnings: Red Robin Gourmet Burgers, Calpine, Buckeye Partners, Interpublic, Ventas, Brookfield Asset Management
8:30 a.m.: Retail sales; import prices
10 a.m.: Consumer sentiment; business inventories; New York Fed President William Dudley speaks on household debt and credit
*Planner subject to change.
LINK: http://www.cnbc.com/2016/02/11/us-markets.html