Friends
After yesterday’s failure to hold a 100 point rally in the Dow, the markets faced a barrage of difficult news this morning. First, China had a sizable drop overnight and then the continued European debt problems provided the fuel for an early morning selloff. Some good news out of certain retailers did not have any positive effect on the markets and by mid-morning the noise out of Ireland, and the Dutch questioning Greece’s sincerity weighed heavily on stocks and commodities. By the end of the day the Dow was down 178 points. Of course, the dollar rose, as is usually the case when European problems rear their ugly head.
Bonds steadied after several days of bloody action as the long end bond vigilantes have been basically thumbing their nose at the Fed and its QE2 process. Municipal Bonds have been taking a beating for a few days as the concerns over municipalities continues to grow. Gold was down over $30 and oil dropped over $2.64. Copper also took it on the chin as it was a “risk off” day and “China is going to slow” day.
Every sector of the stock market was lower by the close with consumer staples and a few retailers holding up the best, and metals and mining feeling the worst of the pain. Financials continue to suffer and information technology, in the wake of Cisco’s earnings, are still struggling. The continuation of the “sell the news” strategy combined with the never-ending European debt problems was just too much for the bulls to overcome. We’ll give this day to the bears. The bulls need to figure out if this is temporary, or the start of something new. Some major support levels were violated today, but we did try to recover a bit and the end of the session. 11,000 held on the Dow but 1180 was violated on the S&P 500. We will see if 1173 can hold tomorrow.
Was today a temporary and somewhat needed pullback? Has the Fed lost its power to impact the markets? Will this be a great buying opportunity for a year-end rally? We will be here at the helm, looking for opportunities that develop.
Have a nice evening everyone.
