COMMENT ON TODAY'S SELLOFF and BRIEF MARKETS UPDATE (3:00 pm EDT)
In a recent blog I commented that the month of September could be very volatile for many markets. That is turning out to be true. Equities (and other markets) are very much on edge and are sensitive to news stories related to global economics as well as significant geopolitical events. Wall Street was already disappointed by the lack of more stimulus from the ECB to help Europe's sagging economy earlier this week, and today a voter on the Federal Reserve's interest-rate setting board announced that the Fed could resume gradual rate increases because the risks facing our economy are now more in balance. This is triggering a strong selloff in equities. Of course, readers of this blog know that we have been anticipating a correction. In yesterday's blog I wrote:
"We are entering a strong reversal zone for the broad stock market next week so there is still time to either rally and make a top at new highs or fall below last week's lows and make a bottom."
It now looks like we will get a bottom. Ideally this would be due sometime next week. A good target for the correction would be around 18,000 in the DOW and around 2,100 in the S&P 500. If we get below those levels we may cover our long positions (entered on July 6) as there could be a more serious selloff in progress. I still feel that once this correction bottoms we will see more rallying towards new highs into the November presidential election. Holding my long position in the broad stock market for now.
Fear of an interest rate hike also boosted the U.S. dollar today and caused gold and silver prices to dip a bit lower. Gold is remaining well above $1,300 and silver above $19 and today's dollar rally may just be a knee-jerk reaction to the Fed's comments. I am holding my long position in both metals today as we are expecting prices to turn up and start to rally any time between now and the end of next week.
Today crude oil lost all of its gains from yesterday's price surge (triggered by the announcement of a surprisingly large drop in U.S. domestic crude supplies). We may still be on track for a new bottom in crude in next week's reversal zone if prices continue lower. If this happens we will be looking to buy. On the sidelines of crude oil.
In a recent blog I commented that the month of September could be very volatile for many markets. That is turning out to be true. Equities (and other markets) are very much on edge and are sensitive to news stories related to global economics as well as significant geopolitical events. Wall Street was already disappointed by the lack of more stimulus from the ECB to help Europe's sagging economy earlier this week, and today a voter on the Federal Reserve's interest-rate setting board announced that the Fed could resume gradual rate increases because the risks facing our economy are now more in balance. This is triggering a strong selloff in equities. Of course, readers of this blog know that we have been anticipating a correction. In yesterday's blog I wrote:
"We are entering a strong reversal zone for the broad stock market next week so there is still time to either rally and make a top at new highs or fall below last week's lows and make a bottom."
It now looks like we will get a bottom. Ideally this would be due sometime next week. A good target for the correction would be around 18,000 in the DOW and around 2,100 in the S&P 500. If we get below those levels we may cover our long positions (entered on July 6) as there could be a more serious selloff in progress. I still feel that once this correction bottoms we will see more rallying towards new highs into the November presidential election. Holding my long position in the broad stock market for now.
Fear of an interest rate hike also boosted the U.S. dollar today and caused gold and silver prices to dip a bit lower. Gold is remaining well above $1,300 and silver above $19 and today's dollar rally may just be a knee-jerk reaction to the Fed's comments. I am holding my long position in both metals today as we are expecting prices to turn up and start to rally any time between now and the end of next week.
Today crude oil lost all of its gains from yesterday's price surge (triggered by the announcement of a surprisingly large drop in U.S. domestic crude supplies). We may still be on track for a new bottom in crude in next week's reversal zone if prices continue lower. If this happens we will be looking to buy. On the sidelines of crude oil.
RSS Feed