U.S. markets are under pressure again after trying to regain their footing in early trading today following last week’s sell-off. As of 7:30 am Pacific, the Dow is off 68 points while the S&P 500 is 12 points lower at 1894. Q3 corporate earnings season begins in earnest tomorrow with results from Citigroup, Johnson and Johnson, JPMorgan Chase and Wells Fargo. Will earnings reports bring a market reversal?
Gold is up $7 an ounce at $1,230 while Silver is unchanged at $17.40 as of 7:30 am Pacific. Copper is off 3 pennies to $3.04. Crude Oil is weak again today, down by more than $1 to just under $85 a barrel, while the U.S. Dollar Index has declined by one-fifth of a point to 85.49.
Canadian markets are closed due to Thanksgiving. BMR Morning Market Musings returns tomorrow.
S&P 500 Updated Chart
The 1900 area, which includes the rising 200-day moving average (SMA), is key support for the S&P 500 – it really needs to hold 1900 on a closing basis – as you can see in the chart below (a close beneath that level today would require confirmation tomorrow). At 35%, RSI(14) is also at previous support.
Since reaching an all-time high of 2019 on September 19, the index has fallen 6% but has not experienced a correction of at least 10% in more than 700 trading sessions. That streak is in danger of coming to an end. Note the downsloping RSI(14) going back to June and the negative divergence between RSI and price when the index hit 2019 last month. A technical breakdown appears to be building.
Nasdaq Updated Chart
It’s interesting that both the Venture (first), the TSX (second) and now the Nasdaq have each broken below long-term uptrend support lines, so the Nasdaq is highly vulnerable to additional weakness especially with a bearish -DI crossover. A retracement to the Fib. 50% or 61.8% support levels certainly can’t be ruled out. The bottom of the upsloping channel (about 4400) can be expected to provide resistance on any rally from current levels.
Silver Short-Term Chart Update
If there’s anything positive to gleam from this short-term (6-month) Silver chart, it’s that sell pressure has weakened considerably since peaking in late August/early September. In addition, the metal has emerged out of an extreme RSI(14) oversold condition that mirrored the overbought condition from mid-June to mid-July. However, this doesn’t mean that Silver is ready to take off to the upside in a major way – at least not yet. It has a lot of resistance to contend with (immediately in the mid $17.50’s), and a slowing global economy is a fundamental factor working against the metal at the moment.
Silver Long-Term Chart Update
The fact that Silver has been pushed to a 4-year low, breaching the $18.50 support level, isn’t a very encouraging sign. This long-term chart suggests that the metal is in the process of bottoming out but hasn’t found a final low just yet. Next major support is at $16. The 2008 and 2010 lows came on spikes to the downside – that’s something to watch for.
