This year is starting off just as last year did, with a flight to safety, a spike in volatility, and a whole lot of red across the board. Yesterday's 330 point decline in the Industrials came as oil saw renewed selling pressure and WTIC crossed below the $50 mark for the first time since early 2009. Oil remains the dominant theme, so we might as well start there.
Bulls and bears had been fighting it out at the $55 level until early last week when we saw that support line violated. As suggested in prior remarks, this was an ominous sign and combined with a bearish looking term structure in oil, made it appear likely further declines were on the horizon. Yesterday we saw oil decline nearly 5%, renewing worries about global growth, profits and employment in the energy sector, possible defaults on energy related bonds, and instability among oil producing nations.
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