By Gareth Soloway on August 19th, 2010 11:24am Eastern Time
The markets are forming a classic “M” pattern on the intra day. This can be seen clearly by looking at the chart below of the SPDR S&P 500 ETF (NYSE:SPY). According to the M-A pattern formation, the markets may be now due for a small up move, prior to the next down leg. This portion would be known as the “A” pattern after the “M” seen below.
The markets drop today is due to ugly economic data. Jobless Claims came in at 500,000, the worst in 9 months and Leading Indicators and Philly Fed were both extremely bad. The markets collapsed each time the the data was released, at 8:30am ET and again at 10:00am ET. Gold is slightly higher on fear while oil is dropping on the perception that demand will fall.
The weakest stocks today seem to be commodity based. Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) are both dropping over 1.5% as oil tumbles. United States Steel Corporation (NYSE:X) had been strong over the last week on rumors of a buyout. After gapping higher today, it has now reversed and turned negative as well. Bottom line is this, the weaker the economic numbers, the weaker the perceived demand will be for oil, steel and all other commodities but gold.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
Comments