Adam Hewison: Don’t Underestimate Yesterday’s Market Action

Yesterday’s action in the equity markets is a grim reminder of just how fragile the economic and financial system is globally. We would not dismiss the market action as just another pullback in the market.

The sharp down move should not be ignored, in my opinion. We are looking at a key support level on the S&P 500 at $1220. A close below that level will accelerate the decline to the next key level of support, which is $1180. That move may have to wait until Friday as traders jockey for positions today. For the year, the S&P at the moment is down, the NASDAQ is flat, and the DOW is barely higher with gain of 3%.

The copper market gave a pretty strong negative signal yesterday, as it moved below the $3.50 level. The copper market is telling us that demand is just not there for this industrial metal. For some time now, we have been discussing the trials and tribulations of Europe and all the drama that has become a Greek tragedy. The fact that they have a new prime minister in Greece does not change one thing, in my opinion.

Italy is now the star of the show, and we are not convinced that Prime Minister Berlusconi is going to step down off his pedestal anytime soon. Politicians still have a “quick fix” mentality and are counting on that to solve this mega financial mess. The reality is, there is no quick fix. It is going to take years for this mess to be cleaned up, and in all likelihood it will get ugly.

The best thing a trader can do at the present time is to watch the market action, as it will tell you exactly what to do. We believe the rest of this week is going to be a very important one, particularly where we close tomorrow. If we have a negative close on Friday below $1220 on the S&P 500, we would then expect to see this index move lower for the balance of November.

Now let's take a look at our trend analysis for crude oil........

We suspect that the crude oil market, basis the December contract, will have problems between the $97 a barrel to $100 a barrel level. With a Chart Analysis Score of +70, this market may be trying to move out of its broad trading range and reach the $100 mark. The $100 level represents a 61.8% retracement of the entire down move starting from the highs seen earlier this year in April. Intermediate term traders should be on the sidelines. Long term traders should continue to be short the crude oil market.


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Phil Flynn: Will He Stay Or Will He Go

No Not Papandreou he was so over the weekend. No the question is all about Italian Prime Minister Silvio Berlusconi.

While Greece has a new coalition government in place now the focus is on Italy and whether Italian Prime Minister Silvio Berlusconi will resign and open up the gridlock that has slowed the reforms that are needed to keep Italy of becoming more like Greece.

The markets have a lack of confidence in Berlusconi after many broken promises on reform and rallied on the prospect that Berlusconi was gone. For oil it is headline to headline.
We will be looking to play ranges!


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