MARKET COMMENTARY

The market indeed tumbled yesterday. The Dow may have even broken the uptrend line which formed a support. While I still believe that the market may fall further on Tuesday, the volume on Monday was disappointing. In addition, the last minute pull-up that pared losses may suggest the bulls are making a come-back. Hence, we cannot yet conclude that the bears have returned. More decisive move is needed before a definitive answer can be given for the market. If you have gone bearish, just be careful.

While we wait for the outcome on Tuesday to decide on the next move, we may perhaps look at other markets which can be interesting to you. They are the crude oil and gold. For ease of trading these markets without going to the futures, you may take the United States Oil Fund (USO) and Gold SPDR (GLD) ETFs which are very liquid. The options, too, are premium rich.

Both precious commodities have crashed for about a month now. Gold is certain to continue its south exploration. Both daily and weekly charts had indicated so. Oil, however, is not very bearish. Though the oil price has come down a lot, the charts are not yet in the bearish territory. It is, therefore, possible that the current trend is only a pullback, not an established bearish trending market. Anyway, both commodities are hot. It is worthwhile to consider trading them.

DJIA Daily Chart

Remember that the Russell’s weekly chart indicated a double-top pattern. Hence, we may have seen the resistance now. With the current overbought condition, pullback is definitely necessary, never mind whether it is temporary or permanent. It is hard to make up what it is for Russell at this time. We shall revisit the chart later.

RUT Daily Chart

The daily chart for NDX looks set for a pullback. If it continues to do so, it may reach a support of 1880 before a rebound.

NDX Daily Chart

STOCKS TO WATCH:

Watch out for housing and financial stocks to get hit again.

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