MARKET COMMENTARY

The Dow is leveling off. Just as expected, it posted a small loss, with the S&P just slightly off the breakeven mark. Now, the critical moment is coming. Both indexes are poised to break down on Tuesday. This can be the confirmation of the end of rebound and the start of a reversal back on the bearish trend. This is also the time to catch the big “fish” we have been waiting for. All I hope to see is a minimum loss of 200 points for the Dow or 40 points for the S&P. Stand by.

There is another interesting development. The crude oil is actually very shaky. Although I expect a rebound on the crude oil before it makes a strong crash, it can just happen anytime. I do not see that the oil can bounce back to the high of $145 anymore, at least for a long time. Despite all the talk of problems with Iran, Nigeria, US crude inventory report and other purported shortage of supplies, the crude price will fall. I know I am making a daring projection. You should know better that none of these fundamentals matter anymore. It is wholly sentiment and technical. All those high-time speculators are seeing risk in trading oil now. If I am the speculator working for one of these big-time investment funds, I will be pulling out now. Many in the industry are thinking the same. A chain effect will sweep through the entire investment circle in oil. It will fall like a house of cards. This crash may happen in tandem with the crash in the stock markets. So, for once, no body can blame the oil of the falling Dow and S&P. Let’s see what kind of excuses the CNBC and other market commentators can come up with.

Apple crashed by more than 9% after trading hours on the back of poor profit outlook for the quarter. What did I say about Apple crashing yesterday? Yeah, right! FYI, I have some puts on it. I will collect my winnings on Tuesday.

DJIA Daily Chart

The S&P is still short of the retracement target. But, I guess it might not make it. I am in the mood of shorting now. I think others might feel the same. After all, it did hit the 20-day moving average during the session on Monday.

SPX Daily Chart

Nasdaq is waiting for the Dow and the S&P to show the way. It should have moved ahead on Monday. But it stayed still. Wow, I am seeing sign of ALL markets avalanche anytime soon - the Dow, S&P, Nasdaq, Russell 2000, and Crude oil.

NDX Daily Chart

STOCKS TO WATCH:

GS, JPM, BAC - bearish reversal.

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