A Look at Tuesday’s Market: The overall market moved sharply lower yesterday in a very broad selloff that saw every sector of the market I track move lower as well. Interestingly enough the Dow Jones Industrial Average, and most of the financial indices all closed on their 40day moving average. Who says “technicals” do not matter! In the commodities markets, Oil was higher by $ 0.36 to $105.53 per barrel, and Gold was lower by $31.80 to $1,672.10 per ounce. This is the 1st time Gold has closed by $1,700 in quite some time. In looking at the chart on the price Gold, I think there is a reasonable chance that we may see Gold continue to move lower and test $1,550 on a closing basis. In the grain markets, Wheat was lower by $0.142 to $6.576 per bushel, and Soybeans were higher by $0.102 to $13.352 per bushel, while Corn was lower by $0.066 to $6.54 per bushel.
A Few Thoughts on Wednesday’s Market: In looking at the charts from yesterday’s trading activity it is pretty clear that basically every index I track has broken its upward or sideways trend and looks to starting what should be at least a short term pullback. There only 2 stocks with a more than a million shares in average daily trading volume that closed at a new yearly high yesterday; and the very vast majority of the heavy volume stocks moved lower on the day.
I continue to see support on the Dow Jones Industrial Average coming in at 12,719.49 on a closing basis. If support fails to hold at those levels, then I see the next level of support on the Dow Jones Industrial Average at 12,391.25 on a closing basis. That would basically take the Dow down to the upper end of last fall’s trading range. I really do not see anything on the horizon that would take the Dow Jones Industrial Average below those levels. Of course, that could always change.
The Bottom Line: I am expecting the overall market to continue to move lower.