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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
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Wednesday, September 21, 2011

The first day of Fall arrived like a lion with the smell of the US $ in the air...


After the Fed delivered its report today, money flowed out of equities, ETFs, commodities, foreign ETFs, and foreign currencies and into the US $. Hit particularly hard were Foreign ETFs, emerging markets, industrials, metals & mining, energy, financials, and the small caps sector as shown on the grids below.





The "thumbnail" view of the intraday comparison chart below of the Major Indices shows where price stopped falling by the end of the day...each at their respective near-term support levels and above their August lows.


Based on:
  • the Fed's new statement today of significant downside risks to the economic outlook, including strains in global financial markets,
  • fiscal challenges and political fractures that continue to plague Europe and the U.S.,
  • inflation still above the Fed's comfort zone,
  • and today's U.S. bank downgrades by Moody's (Bank of America, Citigroup and Wells Fargo), 
I would rate today's drop as a signal that the bottom of the decline in equities that began in May of this year has not yet been reached.

In that regard, I would re-iterate that the next support levels are around 10000 on the Dow 30, 1050 on the S&P 500, 1700 on the Nasdaq 100, 2100 on the Nasdaq Composite, and 550 on the Russell 2000 and could be reached sometime this year, as discussed in my post on September 12:  http://strawberryblondesmarketsummary.blogspot.com/2011/09/money-is-always-interesting-subject.html

I will hold that view until the above challenges have been resolved. I am not a skeptic, but am a student of skepticism, optimism and probabilities...in this case, I do not see a case for an optimistic outlook for the equity markets for the foreseeable future.