Comment: Fifth day down and still no deal done. Volume was lighter than the previous day. The market showed a degree of optimism early in the day, and then it was all down hill. The extent of the rise and then fall is clear in the Dow Industrial candle. That index rose to around the 12400 resistance area,then said, we can?t take this indecision any more, and fell away quite heavily. The index finished at horizontal support and the support of the 15-Day Moving Average. The more volatile indices (Transports, Russell2000 and Nasdaq100) were relatively flat, but the final figure hides big intra-day reversals.
NewHighs/NewLows came in at 25/107. That?s the second day New Lows were higher than 100. Panic selling has set in.
The Materials Sector -0.21% and Energy Sector -0.41%. Those numbers don?t promise anything for the Australian market today. Eight of nine S&P Sectors were down. Financials scratched out an upside number +0.07%. The Banking Sector was down a little, -0.09%. Semi-conductors was also down a little, -0.15%.
Europe: France -0.57% Germany -0.86% London +0.28%
Gold in U.S. Dollars is up +0.17%. Gold in Oz Dollars is up +0.5%. AUD/USD is down slightly -0.18% to finish at 110.06. EWA (the ETF for Australian shares) was down -0.86%.
Technical Comment on the DJ Industrial Average:
The DJIA finished at 12240.1. Now at the next level of support around 12220. Support levels just keep falling. Below the 13-Day MA. Negative. At the 150-Day MA. Last ditch? Indicators: Stochastic: 16.7. Oversold. We now have the possibility of a reversal to the upside. The 13-Day MA is above the 150-Day MA and heading up. Positive. RSI.9 is at 35.7. Below 40 ? in a zone where reversals can occur. Caution. MACD Histogram below Zero. Negative. MACD below zero. Negative. CCI.9: -177.7. Below -100. Oversold.
Tuesday?s ?sell? signal continues in force. Panic is showing up in the NH/NL figures. The market is oversold, so a bounce is possible. Here?s one final thought:
The NYMO is down at a level where reversals occur. It could take a few days yet, but the probabilities of a turn-around are getting higher.
If "the deal" means a continuous revisiting of the debt ceiling between now and the Presidential elections, I think the market will view that as a negative.
Unfortunately, I think that's the compromise the Tea Partiers might accept - it would keep pressure on Obama and make him look weak and ineffectual. The Tea Partiers, of course, want something much stronger than that - but probably won't get it. The Dems want the ceiling lifted and no revisiting until after the elections. That would be the best deal for the market. Then other factors can come into play. "Normal" would return.
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