Thus far, no one seems to be eager to ride to the stock market's buy-the-dip rescue. Following on the heels of Friday's 1.9% decline, the S&P 500 futures are down 12 points and are trading 0.4% below fair value. The Nasdaq 100 futures are down 30 points and are trading 0.4% below fair value. The Dow Jones Industrial Average futures are down 142 points and are trading 0.6% below fair value.
There isn't a lot of mystery behind the negative bias. Trade uncertainty, political uncertainty, growth uncertainty, and monetary policy uncertainty continue to provide a rationale to reduce risk exposure.
For many, though, the one reason to reduce risk exposure is simple: the price action just isn't what it used to be.
Former leadership stocks have gone from the penthouse to the outhouse; cyclical sectors are behaving in a way that refutes positive proclamations regarding the economic outlook; and the major indices have fallen between 8.9% (Dow Jones Industrial Average) and 16.8% (Russell 2000) in the fourth quarter.
The stock market isn't living up to the seasonal norm or to the assumption that it is due for a sizable bounce from a short-term oversold condition. That could still change, but the overarching point is that it hasn't -- and that is weighing heavily on investor sentiment.
The Empire Manufacturing Survey for December didn't help matters. It checked in at 10.9 for December (Briefing.com consensus 20.0), down from 23.3 in November, with a deceleration seen across almost every category.
A number above 0.0 still connotes expansion, yet it is clear to see that activity decelerated in December; moreover, the report indicates that optimism about the six-month outlook was slightly more tempered than in November.
The futures for the major indices all turned lower in the wake of this regional manufacturing survey, underscoring the market's sensitivity to economic data that corroborates concerns about being at, or near, peak growth.
The NAHB Housing Market Index for December (Briefing.com consensus 61; Prior 60) will be released at 10:00 a.m. ET and could also be a market mover given the deepening concerns about the slowdown in the housing market.
This data will all be part of the Federal Open Market Committee's (FOMC) data-dependent decisions in the months ahead. It will also factor into its decision in the week ahead.
The FOMC meets December 18-19. The market is anticipating another 25 basis points increase in the target range for the fed funds rate, yet it is also anticipating a softer line on the Federal Reserve's interest rate projections for 2019.
The FOMC meeting is the key event this week given that the decision and projections shared by the Federal Reserve have implications for all capital markets. What is heard on Wednesday from the Federal Reserve could give new meaning to the term "Hump Day."
Today and tomorrow, however, the market can only speculate as to what will be said, so it would be little surprise to see some seesaw trading action in front of the Hump Day decision.
The seesaw is tilted lower for now.
In other developments, a federal judge in Texas ruled the Affordable Care Act is unconstitutional and struck it down in its entirety. That decision is headed to an Appeals Court, and, according to reports, most likely headed to the Supreme Court.
This news should kick up some trading dust in the health care sector, adding to the cloud of uncertainty that has been hanging over, and creating lots of respiratory problems, for the bull market.