Stocks Breakout... Downwards!

Yes, the Dow broke out downwards by more than 300 points today amidst speculation of a negative Jobs report tomorrow (see economic calendar) due to the negative ADP employment report. The Dow have been looking for a break out for a while already and it seems like oil price has gotten into the inelastic zone right now as further reduction doesn't seem to do any more good for the stock market. Investors now comfortable with the way oil price is going has put it behind them for a while and are concentrating on the economic numbers once again. Obviously sentiments are still widely pessimistic as investors over-react to possible bad news and under-react to possible good news. Bond yields continue to be depressed across the board, reinforcing the pessimism in the stock market. However, don't be surprised to see the Dow actually pull up a little tomorrow no matter how the jobs report turns out. All big drops usually follow up with a small pullup no matter what the news say. For now, the Dow needs to break into new lows in order to confirm the resumation of the primary bear trend.