The global economy seems to be dying on the vine as more news of economic slowdown pours in everyday. The U.S. stock market and ETFs continue to react negatively to deteriorating economic news even as the Federal Reserve bought $6 Billion in their POMO operations today.
The DJIA, S&P 500 and NASDAQ are all below their 50 Day Moving Averages while the NASDAQ has also dropped below its 100 Day Moving Average.
The NASDAQ and DJIA are now on Point and Figure “Sell” signals, having experienced a Bearish Catapult Breakdown at yesterday’s close and now has a price target of 12,050.
chart courtesy of www.stockcharts.com
Today’s economic reports gave the stock market a quick boost at the open when new home sales came in at +7.3% and an annualized rate of 323,000/year which still is at severely depressed levels.
But then, the Richmond Federal Reserve reported a severe drop in activity in the region as the report actually contracted to -6 from a +10 in April.
China’s Purchasing Manager’s Index declined, Japan is back in recession and Belgium, one of the core countries in the Eurozone was issued a credit downgrade warning by the Fitch ratings agency.
Spain’s bond premium to the benchmark German Bund is back to January’s levels and Greek 10 Year Bonds are a whopping 17% which is clearly unsustainable.
Closer to home, Vice President Biden continues to work with Congress towards what they’re labelling a $1 Trillion downpayment to avert a government shutdown in August and the Illinois State Treasurer says his state is on the “verge of financial disaster.”
So, it wasn’t a great day for ETF and stock market investors and more reports are yet to come, particularly GDP on Thursday.