ZLBT Chats

Wednesday, November 17, 2010

WALL STREET >>> Bears Emerge On Irish Bailout and Korean Rate Hike

Macroeconomic Mayhem >>> Dow Plummets 1.59%
Concerns about the global economy weighed heavily on U.S. stocks today, as traders continued to price in their concerns about a potential rate hike from China and a looming debt crisis in Europe. Beginning with news out of Asia, a quarter-point rate increase from the Bank of Korea rekindled expectations for a similar move from China's central bank.

The threat of slower economic expansion from the emerging nation has been perceived as a growing threat in recent weeks, particularly with Beijing officials on Monday outlining new restrictions on foreign investment in real estate.

Meanwhile, in Europe, finance ministers convened in Brussels to discuss a potential bailout for debt-laden member countries, such as Ireland and Portugal. Irish Prime Minister Brian Cowen asserted that his country has enough cash on hand to meet its funding needs through the middle of 2011, but many analysts expect European Union officials to push through some kind of rescue package in order to rein in borrowing costs.

Amid this macroeconomic mayhem, U.S. stocks were under pressure all day long, with the Dow Jones Industrial Average making its first trip south of 11,000 since Oct. 20.

The Dow Jones Industrial Average (DJIA – 11,023.50) managed to maintain its footing above 11,000, but not by much. After bottoming out at 10,978.93, the Dow settled on a loss of 178.47 points, or 1.59%, as all but two of its 30 components closed lower. Retail titans Home Depot and Wal-Mart Stores gained ground after their respective earnings reports, while Travelers Companies set the tone for the 28 decliners with its 3.6% slide.
After notching its steepest single-day slide since Aug. 11, the Dow is now perched just north of its rising 50-day moving average, located at 10,966.69.

The S&P 500 Index (SPX – 1,178.34) followed suit by giving up 19.41 points, or 1.62%, to notch its lowest daily close since Oct. 20. The SPX found an intraday floor near 1,173, which is home to its 10-week moving average. Finally, the Nasdaq Composite (COMP – 2,469.84) ended on deficit of nearly 43.98 points, or 1.75%, to record its first daily finish south of 2,500 since Oct. 26.

Crude futures spiraled lower today, pressured by the threat of slower economic growth from China -- the world's No. 2 oil consumer. Meanwhile, concerns about European sovereign debt prompted a safe-haven surge for the U.S. dollar, making oil futures less attractive to investors holding foreign currencies.

By the close, crude oil for December delivery gave up $2.38, or 2.80%, to end at $82.72 per barrel. This marks crude's lowest daily close since Oct. 29.

Technical Outlook
CRUDE OIL (JAN) 11/17/2010: The close under the 40-day moving average indicates the longer-term trend could be turning down. Declining momentum studies in the neutral zone will tend to reinforce lower price action. The close below the 18-day moving average is an indication the intermediate-term trend has turned down. The market is in a bearish position with the close below the 2nd swing support number.

The next downside target is 80.56. The next area of resistance is around 83.92
and 85.89, while 1st support hits today at 81.26 and below there at 80.56.
January Crude Oil closed down 2.38 at 82.82.72. This was 0.06 up from the low and 2.61 off the high.
What a lucky day for FKLI LONGs
If not for Hari Raya Haji holiday, you'd had been bearhugged today
Until we meet again tomorrow morning .....

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