Stumble it!
I said last evening to watch for more shoes to drop. And today a pair of shoes fell from the sky and hit the market on the head. On top of that the market was up against resistance as I highlighted on the S&P 500 chart last night.
The ADP employment report was much worse than any of the Wall Street analysts were expecting. And with the ADP being historically under estimating the severity of the job losses it made the shoe drop with a loud thud. Then as Intel (INTC) came out with an earnings warning that was the other shoe, and it also landed with a loud bang.
That, combined with the resistance levels the market was at sent the major indices into a tail spin today. It is becoming apparent quickly that we will be seeing many more ‘earnings warnings’ coming before we get into the thick of earnings season in a couple weeks. And the retail sector will also be unveiling their plans for cost cutting (layoffs, store closings, etc), or even bankruptcy.
Then the Congressional Budget Office revealed that the deficit now stood at $1.2 Trillion. Bail out after bail out is going to put the United States at great risk. The Government can not keep up this rate of borrowing from the future to fix the now. This will unfold into an even larger problem for the economy in the near future. This is not just our children’s problem, it is ours and it is here now.
You know what Hank Paulson said he will do when he leaves office? In a Q/A session during his remarks at the Economic Club of Washington today he had this response…
[...]said his next endeavor will include work with the environment.
The environment? Good grief!
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The S&P 500 E-Mini’s today fell through a support level (920) and came to rest at 905 which is a Fibonacci price level. The after hours trading on the futures has the S&P 500 trading sideways keeping a tight grip on this 905 area. This presents us with an interesting scenario for the morning. If it stays right at 905 then this could be a point for a bounce. Should it break below the 905 then it could be a warning that it will make a run for the channel line support shown on the daily chart.
The S&P 500 is sitting on the edge of a coin at this time.
S&P 500 E-Mini - Hourly Chart
S&P 500 E-Mini - Daily Chart
Tomorrow morning brings more economic news that is likely to have an impact on the market. The Bank of England will announce their rate decision at 7:00am (US EST). Recall that there is some speculation that the Bank of England may cut rates to the lowest level in 300 years.
Also tomorrow is the weekly jobless claims. That is an important bit of data that should be followed every Thursday.
Remember that the weekly economic events and corporate earnings scheduled for the week is always available in the Rebel Forum (in the calendar section). If you have not registered for the forum (it’s free) go over to the forum and sign up so you can gain access. And please don’t be shy, start chatting with other users there. Have your own charts you want to share or ask questions about? You can put them in the forum!
