Oil trades below $50 & leads market lower

Index & Sector performance 1/5/15

The Market:

The market was again led by Oil’s decline as we closed below $50 per barrel for the first time since 2009.  In the Analyst Comments below you will see a downgrade for Caterpillar (CAT) by JP Morgan.  In the note the analyst commented that up to 30% of CAT’s revenue could be under pressure due to lower oil prices.  Similarly, Evercore downgraded Terex (TEX) to Hold with an $26 target and United Rentals (URI) to Sell with a $87 target citing concerns that oil’s sharp decline will hurt energy investments and thus construction (the Evercore downgrades are not listed on the table below as they were found later).

There was an attempt late in today’s session to rally the S&P and succeeded in closing the index off the lows but we are very suspect of these late session moves and would actually prefer to see those gains lost overnight resulting in some form of gap down tomorrow which could then provide a good short term long trade opportunity.  Looking out more intermediate term we see the market could be vulnerable to lower prices.

No surprise that Energy (XLE) led today’s decline but 4 other sectors finished over 2% lower and no sector from the WSC Scoreboard managed to finishing up on the session.  HealthCare (XLV) was the relative outperformer finishing down only 0.51%.

Today Vehicles Sales were in-line but traders will likely be focusing on the FOMC minutes and Jobs data out later in the week.

Economic Calendar week of 1/5/15

Reporting EPS 1/6/14 Pre-Market:

Companies Reporting EPS 1/6/15 pre-market

Analyst Comments:

Upgrades 1/5/15

Downgrades 1/5/15

Initiations 1/5/15

Price Target Changes 1/5/15