Global stock markets tanked today and blood ran on Wall Street as the Dow Jones Industrial Average (DIA) suffered its worst one day point drop since 2008 during the darkest days of the financial crisis.
Major indexes are now down for the year and are now in official “correction” territory, down 10% or more.
However, at Wall Street Sector Selector, we had a nice day as our inverse ETF, put options and cash positions served us well.
We remain in the defensive mode, expecting lower prices ahead.
Nine out of 10 of the last days have been down and today was the highest volume day in the last twelve months with multiple stocks making new 52 week lows.
On the macro front, unemployment remained flat at 400,000 new claims and Spain continues to boil as the threat of contagion just won’t seem to go away.
Tomorrow comes the much awaited monthly Non Farms Payroll report which will likely be a market mover.
On the technical front, major support levels have been removed and multiple “sell” signals have been generated, including many in point and figure charting which I follow and even the venerable Dow Theory system which is the oldest technical charting system in use today.
This is an ugly chart if you’ve ever seen one as the 200 Day Moving Average has been broken and the blue 50 Day Moving Average and red 200 Day Moving Average are moving towards forming the “death cross,” wherein the 5o crosses below the 200 day which is a widely watched “sell” signal and bear market indicator.
Markets are very oversold now and so a bounce could be expected and everyone is looking to the Fed to ride to the rescue as they did last August atJackson Hole.
Global Market Summary:
Dow Jones Industrials (DIA): -512; -4.3%
S&P 500 (SPY): -60; -4.8%
NASDAQ (QQQ) -136; -5.1%
Russell 2000 (IWM): -46; -5.9%
Tomorrow brings the all important July Non Farms Payroll Report, July Unemployment and July Average Hourly Earnings.
I’m starting to repeat myself, but it just doesn’t get more exciting than this.
Have a great evening,