MARKET COMMENTARY

Monday was another highly volatile trading session. The Dow slumped to a triple-digit low before rebounding to a high of 50 points gain. On closing, the Dow settled at 25 points loss. Initially, the rebound was believed to be prompted by the plunge in the oil price. When the rally fizzled, the oil price was no longer the factor.

Since I talk about the oil price, I might as well touch on the commodities. There had been a lot of speculative activities on oil, gold, steel, copper, and even rice. I believe the commodity bubbles had been busted. As I mentioned earlier, the oil was set to fall. This is going to go down further to possibly below $100 before stabilizing above the three digit price. Gold, too, is set for more crashes. The crash actually started about two weeks ago but the chart had just turned bearish yesterday. Steel is next in the queue. You will begin to see or hear comments about weakened economy or slower demand bringing down these commodities’ prices. There may be some truth in it but the technical factor is always the most reliable answer - charts indicated the commodities were way overbought earlier.

The triangles of Dow and S&P are still intact although they begin to slide toward the lower boundary. As triangles are a continuous technical pattern, I expect to see the bearish breakout on these indexes soon. You can start powering up your engine and getting ready for another wild ride.

DJIA Daily Chart

The Russell has moved downhill ahead of other indexes. It has lost the most on Monday comparing to its cousins. If we see another 20 points loss on Tuesday, then the current rally is over. The chart remains bearish.

RUT Daily Chart

The Nasdaq also looks set to break the support. Since a rectangle is also a continuous pattern, the index should the support soon enough.

NDX Daily Chart

 
STOCKS TO WATCH:

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