Uncle Ben Pulled The Carpet From Under Our Feet

FUNDAMENTAL ANALYSIS
Stocks continue to dive today with the Dow making an intraday low of minus 139 points! This happened directly after Uncle Ben reiterated that the Feds remain inflation cautious, translating to the fact that we will not be seeing a rate cut anytime soon. As if to compound the problem, oil also spiked above $64 intraday due to an unexpected drop in crude inventory. This spike not only put pressure on most market sectors, it also caused a drop in the oil services sector after it failed to close above $64. Well, like I said yesterday, you can find all the reasons to be pessimistic whenever the market drops and yes, I still do not see a glimpse of optimism in the horizon yet. The heavy-weight GDP is due tomorrow with another heavy weight PMI on Friday. I see all the reasons lining up for the market to go down to 12100 as I have expected.

TECHNICAL ANALYSIS
No surprise today as the market continues down along its Tower Formation path. Momentum is increasing to downside with volume slightly on the rise... a classical steady trend. Strangely, even with such a drop, the short term stochastics are still lingering in the overbought region. This, along with such a nice build up of downside momentum, made me feel skeptical if the 12100 support level can indeed hold on and brace the Dow within the 12100/12500 channel that I predicted yesterday. If the 12100 level fails to hold, a testing of the 200days moving average at about 11900 would be the next level of support. For now, both the daily and weekly charts still support the view that 12100 is a strong support level. Let's see what happens and position ourselves accordingly.


Technical Chart By Worden Brothers TC2007 Charting Software
Voted Best Software By Readers Of Stocks & Commodity Magazine Since 1993!