So far, it looks like "the rest of the world" is prevailing, and with no more POMOs on deck until after Thanksgiving, it looks like we may end the U.S. trading week on a sour note. Let's take a look at a few charts and see where we stand....
I'm going to keep the commentary short, as I've already talked about most of these in previous updates. First up, we'll look at the S&P 500.
Just a couple of things to note here. First - check out the Aroon indicator - we have now crossed over and are officially in a negative trend. How long and how severe are still TBD, but for the moment, the odds are against the bulls. Otherwise, not much new to report here. Support levels from my previous update are still valid, but we will first need to see a break below the lows from last week.
On to the Euro - and a pretty wild ride it has been. We saw a pretty decent rally last week, as rumors ran rampant regarding the Ireland situation, and consensus seemed to be predicting that "all would be well". Ahem....sorry, but no. All is not well with Ireland, nor for that matter with a number of the PIIGS countries, and the Euro came crashing back down to reality over the past 24 hours, losing 230 pips or so in the process.
How's that for a waterfall!? The prospect of both Portugal and Spain being the next dominos to fall prompted this sell-off, and it's difficult to say how much more selling we'll see in the short term. If I were to take a stab, I'd say that we may see a snap-back rally up to the 1.3460 level, but since we're still sitting on the session lows as I type, we may have further to fall before any snap back rally occurs. Overall however, I'm still bearish on the Euro and would expect us to head back down below 1.30 over the next few months.
Now let's take another look at Cisco.
After a brief rally back up to kiss the previous 2010 lows at 19.81, we've rolled back over and appear to be heading down to test the 18.94 - 19.00 range I previously mentioned. Today's selling was once again on above average volume, so the bears clearly aren't finished with Cisco, but I think we may be ready for a bounce if we get down to the support noted above. We'll take another look at this in a few days.
Finally, a look at Campbells Soup. Poor Q3 earnings provided the catalyst for the recent drubbing, and after forming a nice bear flag, we saw a pretty significant sell-off again today, with price closing at $34.
Once again, note the volume of the selling today...a sign that the bears are still very much in charge and will likley sell this down even more. The chart below shows Campbells on a longer time scale to illustrate some potential price targets.
Note that today's action took out the Flash Crash low from May 6. We could very well see a complete retracement back down to the February lows from here, but if not that, I think we'll at least see us test $33 before any significant bounce. Just one to keep an eye on.
Summary: There are a lot of negative things happening in the world these days, and since we live in a globally connected environment, events occuring on the other side of the world can (and do) impact our markets on a regular basis. If Ben and the Fed weren't implementing QE2 right now, I'm certain that the S&P would be on it's way back down to test 1,000, and it still might do so, but count on the Fed to fight this all the way. In the short term, unless we get some sort of miracle over night in Europe, or sudden peace in Korea, I would expect us to end in the red tomorrow.
Happy Thanksgiving to all in the US. I may post over the holiday weekend, or I may just watch football and eat turkey. :)
No comments:
Post a Comment