I listened yesterday to the radio after the close. By accident I happened to listen to the nightly business report and just noticed how inherently bearish the reporting can be. Yesterday the Dow “had a rough day” closing over 100 points lower. We have rallied 4000 points off of the most frightening down move we’ve seen since 1987 or 1932, yet a 100 point down move when the index is between 10000 and 10300 is reported as “a gigantic down day”. Seems no one in the reporting business has a concept for percentage moves anymore.
Also, a cursory observation of trading ranges in the stock indexes reveals that 100 to 200 point trading ranges are commonplace now.
If the Dow was at 7000, a 100 or 200 point move is much more statistically significant than when the Dow is at 10,300. But you never get any analysis like that from the mass media. Its always “things are great, you’re missing out” or, “the world is coming to an end, tune in at 6pm to watch it”….
For the time being, we have been overdue for some downward pressure after large rallies in the stock indexes, metals, and commodities. Look for some continued profit taking, although, we may have a situation like yesterday, where in the afternoon, the bears had no one left to sell to and instead took a 100 point bounce into the face. That type of action should be anticipated, as “momentum” traders try to push trends, and if they don’t follow through, they escape via stop orders. That results in more volatility.
As of this writing this morning, the high in DJZ is 10332 with a low at 10236, almost a 100 point range. Currently the last print is 10265, down 65. Perhaps the news anchors are already getting ready to scream “the sky is falling”.
SPZ has a high at 1095 and a low at 1083 down 6.75 handles so far.
Gold is lower at 1,140, with a high at 1148 and a low at 1,132, a nice 17 dollar trading range so far for today.
Finally,
Crude Oil is trading at 76.83, down about 60 cents. Its high so far is 7799 and its low is 7635. The recent high on Wednesday at 8033 is resistance, with support at last Friday’s low at 7557.
Don’t listen to the financial news readers, unless you want a constant panic headache/ attack… You can notice them, hear them if you must, but don’t give them too much influence over your trading decisions.
Good Trading
