Daily Investment Interpretations

October 25, 2011

2011-10-25: (Tuesday Night): Today, the markets have tanked, bouncing off their 200-day moving averages to drop close to their support levels (1,225 on the S&P 500): Chin music for the markets, Trepidation In Front of Summit Sends Stocks LowerThe NASDAQ Composite subtracted -61.02 points (-2.26%) to close at 2,638.42. The Dow receded 207 points (-1.74%) to 11,706.62; the S&P 500 skidded 25.13 points (-2%) to settle at 1,229.05. Oil rose to 92.47; gold soared to 1,706. The VIX advanced 2.06 points to 32.22.
   
The S&P 500 closed at 1,229 today, 4 points above its support level of 1,225. If it successfully reverses and rises from here, then it will be ready for another pass at its 200-day moving average. If not... well, then I guess it will go down before it goes back up.
    State of the Markets considers today's contretemps to be a retest of its 1,225 support level, and to offer a "second chance" buying opportunity: Technical Talk: Does The Tape Really Tell All?. Of course, before this can be a buying opportunity, the indices must rebound from their resistance levels. (In all likelihood, by the time we're satisfied that the indices have rebounded and that this represents a "second buying opportunity", the indices will probably have moved back above this window of opportunity.) However, the markets seem to have pulled back on cue. Jitters over Europe have been cited as the principal culprit, although a lower-than-expected FHFA House Price Index, a disappointing consumer confidence report, and a gloomy Richmond Fed Index added to investor trepidations.
    Some additional State of the Markets articles include: 
    Richmond Fed Report Paints a Gloomy Picture  
    Consumer Confidence Takes a Dive in October  
    Must Read: 3M Earnings Report Talks of Slowdown  The company is looking to emerging markets for marketing opportunities.
    UPS Beats By A Penny; Reaffirms Guidance  
    US Steel Sports Strong Results  
    Case-Shiller Home Price Composite Up Again in August; Down -3.8% Year-over-Year  
    Merkel Objects To Line In Summit Conclusion; Stocks React  
    FHFA House Price Index Falls in August  

    Jon Markman writes: EU deal won't stop recession.
    Manufacturers lower sights "U.S. manufacturing and metal companies curb outlooks raising fresh recovery questions."
    Hulbert on how not to seek dividend income  
    Playing emerging markets now  The author suggests playing emerging market growth through Western companies that are heavily exposed to emerging markets. (He also points out that excessive personal debts and aging populations imply that Western nations are apt to be "the  consumption sponge that absorbs all of the world's production."

    Market futures are down about % tonight.