Yesterday's action in the equity markets is a grim reminder of just how fragile the economic and financial system is globally. We would not dismiss the market action as just another pullback in the market.
The sharp down move should not be ignored, in my opinion. We are looking at a key support level on the S&P 500 at $1220. A close below that level will accelerate the decline to the next key level of support, which is $1180. That move may have to wait until Friday as traders jockey for positions today.
For the year, the S&P at the moment is down, the NASDAQ is flat, and the DOW is barely higher with gain of 3%.
The copper market gave a pretty strong negative signal yesterday, as it moved below the $3.50 level. The copper market is telling us that demand is just not there for this industrial metal.
For some time now, we have been discussing the trials and tribulations of Europe and all the drama that has become a Greek tragedy. The fact that they have a new prime minister in Greece does not change one thing, in my opinion. Italy is now the star of the show, and we are not convinced that Prime Minister Berlusconi is going to step down off his pedestal anytime soon.
Politicians still have a "quick fix" mentality and are counting on that to solve this mega financial mess. The reality is, there is no quick fix. It is going to take years for this mess to be cleaned up, and in all likelihood it will get ugly.
The best thing a trader can do at the present time is to watch the market action, as it will tell you exactly what to do. We believe the rest of this week is going to be a very important one, particularly where we close tomorrow. If we have a negative close on Friday below $1220 on the S&P 500, we would then expect to see this index move lower for the balance of November.
Now, let's go to the charts and the video and see how we can create and maintain your wealth in 2011.
S&P 500 INDEX
OUR VIEW: $1250 resistance – $1226 support
The massive move down in this index yesterday cannot be ignored by this observer. We still believe that the $1220 level holds the key for the S&P 500. With a Chart Analysis Score moving between -65 and -75, we may just be on the brink of an emerging downtrend. That still needs to be confirmed basis our weekly Trade Triangle indicator. Intermediate traders should be on the sidelines waiting for a new Trade Triangle short signal. Long-term traders should either be in cash or continue to hold short positions in this index.
See today's S&P 500 Video Here.
Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = -65
Suggested S&P 500 Trading Instruments:
Non Leveraged ETF's: (Long SPY) (Short SH)
2 x Leveraged ETF's: (Long SSO)(Short SDS)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity in some ETFs is very thin. Contact your broker for more information.
IS PERSONAL MARKETCLUB COACHING RIGHT FOR YOU?
Free consultation. 877–219–1482
OUR VIEW: Trading Range
The spot silver market slipped to its lowest levels in eight days before recovering. This market remains in a broad trading range bound by $33.50 an ounce on the downside and $35.50 an ounce on the upside. With our Chart Analysis Score reading -55, we seen no clear-cut trend at the moment for this metal.