As you might recall crude oil the past two weeks was 90% correlated to stock market trends. With oil up over 2% Monday the relationship may be changing some as stocks fell to close the month near what I had described as almost right on my forecast for the S&P 500 at 1956.00. The market exceeded this level slightly last week.

Not to belabor the headline but economic data Monday was, well, terrible this day. Chicago PMI Index fell below 50 to only 47.6 vs prior 55.6. (Remember a reading below 50 indicates severe economic contraction. The Dallas Fed Mfg Survey fell once again to -8.5 vs prior -10.2 and Pending Home Sales dropped to -2.9% vs prior 0.9%. None of this was good obviously.

As indicated oil prices rose as the Saudis, given the headline, said they’d cooperate now with their peers who wish to stabilize prices. That was humorous since they just said last week they wouldn’t do that in no uncertain terms. Well, if they will cooperate that just opens the door to cheating which is just the way they’ve always rolled.

Countries dependent on oil prices moving higher rallied especially with emerging markets. Bonds overall were stronger while the commodity complex rallied. The S&P 500 closed the third straight month lower by just 0.4%. Stocks closed lower on the day helped by a weaker overbought condition as noted by the trusty McClellan Oscillator (NYMO).

Market sectors moving higher included: Volatility (VIX), Bonds (TLT), Junk Bonds (HYG), Emerging Markets (EEM), Brazil (EWZ), Russia (RSX), Mexico (EWW), India (EPI), South Korea (EWY), Malaysia (EWM), Africa (EZA), Gold (GLD), Gold Stocks (GDX), Oil (USO) and Silver (SLV).

Market sectors moving lower included: S&P 500 (SPY), Dow (DIA), Nasdaq (QQQ), Healthcare (XLV), Biotech (IBB), Energy (XLE), Financials (XLF), Banks (KBE), Industrials (XLI), Materials (XLB), Homebuilders (ITB), European Union (EZA), Germany (EWG), Japan (EWJ), Euro (FXE) and Shanghai (ASHR).

Below is the heat map from Finviz reflecting those ETF market sectors moving higher (green) and falling (red). Dependent on the day (green) may mean leveraged inverse or leveraged short (red). 

Volume was about average for the day and breadth per the WSJ was mixed to negative.

Chart Of The Day

With the NYMO still showing overbought levels perhaps we could continue lower until this reading moves lower. The bad economic news Monday finally affected markets Monday as declines there were severe.

This week is full of important data with Tuesday featuring PMI Mfg Index, ISM Mfg Index and Construction Spending. The week winds up with the all-important, if not silly, Employment Report. In between is plenty of other market moving economic reports.

Let’s see what happens.