June 1st, 2012
in Gary's blogging
Market Crashes And I Am Happy As A Pig In Poop
Great news if you shorted the market, because it is down and there are few bulls to be seen. Foxnews reported: "Wall Street suffered its bloodiest day of the year as U.S. stocks sank more than 2%". I also suspect this is just the start of a decline, but don't expect a waterfall as that isn't in the cards. Monday we will see the 'dippers' climb on board and push the indexes back up to what is now the resistance levels and 200 day MA's. But few will go above those demarcations and those that do won't stay there for long.
If you are one of the bulls out there, worse yet a 'dipper' all I can say is that you were warned a long time ago that this day was coming. I suggested months ago to lighten up on your portfolio, then called to sell more and finally said it was advisable that you dump every one of your dogs and have a minimum of 25% cash on hand. If you did great, if not lets see if we can help you think this quandary out. O.K., let's look at the market today and try to arrange the tea-leaves into some sort of order that makes sense. Follow up:
The DOW, SP500, $RUT and the bellwether SPY all fell below their major supports and 200 day MA's. The Russell 2000 made a 'Black Cross' yesterday by having its 50 day MA cross over its 100 day MA. The DOW will do the same on Monday followed by the SP500 and SPY by Wednesday. This basically spells out the fact the markets are going through a bear stage correcting (maybe) for the extraordinary market rise we observed sense October 2011.
Gold is up to 1623 with a positive bias. WTI oil is at 83.26 being as low as 82.28 this afternoon. Brent crude was in the low 97.20's and is currently trading in the 98.70 area.
The DOW closed at 12118 down 274.88 or -2.22% (200 day MA is 12254, resistance is at 12288), the 500 closed at 1278 down 32.29 or -2.46% (200 day MA is 1284, resistance is at 1288), the $RUT closed at 737 down 24.40 or -3.20% (200 day MA is 756, resistance is at 746) and SPY is at 128 down 3.41 or -2.59% (200 day MA is 128.63, resistance is at 129.20). The trend is down and the current bias is down.
The next step for the SP500 is the 1250 to 1225 area representing a significant support and I think we will eventually see the 500 test that zone before the year is out. But for Monday it is entirely possible for the markets to start out down but recover before the day is over setting up a bull trap, so be careful. The rest of the week will be setting up a sideways channel to work out the support built there some time ago. Once it is gone we will see more decent.
Here is the 500 at the close.
The $RUT at the close.
The DOW at the close.
The indexes at the close.
Were you one of those that followed my suggestions? Did you buy some SQQQ on 5-24 like I did at 52.84 and see it rise to 58.12 today? Probably not as I am just one of thousands financial analysis out there. The difference between me and those 'other' guys is that I actually trade the market and not just write about it. Remember we at Econintersect are here to help you profit the most you can as we are traders and investors alike.
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Written by Gary