Stocks Dive On Grim Economic Outlook
The Dow was down 89.23 points today as all hopes of a rate cut continue to diminish. The Fed is apparently torn between inflation concerns and a slowing economy as I have previously noted and the best thing to do under such circumstances is definitely to keep things at status quo and see how things develop. In fact, the stock market took a nose dive early in the trading day as the International Monetary Fund cuts it's forecast for US Economic growth to 2.2%, almost 1% down. This worry over a slowing economy lasted throughout the trading session. As if to compound the problem, Feds minutes revealed that the Feds will continue to firm policies if inflation continue to be a concern despite a slowing economic growth. Even though sentiments are largely negative today, I still see traces of buying coming in when the Dow was down about 100 points. CBOE Equity put/call ratio was also relatively stable underscoring the fact that there is still an optimistic undercurrent. This is a tricky market condition not for the weak of heart.
TECHNICAL ANALYSIS
What looked like a scary drop today in the Dow was actually nothing surprising. Like I mentioned yesterday, I would not be surprised to see a drop in the Dow back down to the bottom of the "Secret Bullish Channel" (please see my post on 27 March on the Secret Bullish Channel) before rebounding. Looks like it is behaving totally according to plan. There is still some distance to the bottom of the channel and so I will not be surprised to see another down day tomorrow.
Technical Chart By Worden Brothers TC2007 Charting Software
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