Well correction day is finally here.
The Nikkei had a 300 pt sell-off on slowing consumer spending in Asia and the rest of the world markets are in pullback as well so, at least for the morning, we will be down.
The key to today is how far down will we go?
AA was disappointing yesterday and UTI got a downgrade and GM gained too much yesterday to hold so it will be critical to see how the Dow performs around that magic 11K mark.
The Nasdaq is up so much that it only needs to hold 2,3000 (an 18 pt drop) to impress while the S&P looks safe as long as it remains above 1,270 (a 20 pt drop).
Any sort of positive finish to the day will be an all-in signal to the markets and the strength and momentum are sure there but we need to watch volume as much as direction today.
Gold is pulling back just a touch in Europe but it was the US market that took it down last time so that movement will be more telling.
Oil is defying all logic (maybe Iran is today’s excuse) by continuing to rise in price even as supplies continue to build.
DHI will lift the homebuilders today with great projections. They had a huge $3 gain yesterday and are up 30% from our November 16th selection. I’m liking HOV, BHI and MTH for movement today but only for trades as one bad word from another builder or the Fed can have the opposite effect on the market.
I’ll be away today but I’m staying in cash until the Nasdaq turns positive, then I will go bargain hunting!
Good trading,
– Phil
