The market collapsed lower today as the new ECB chief Mario Draghi told markets he would not save the day. Expectations had been high for the ECB to come in and buy bonds from Italy and other stressed nations. It was clear in the short term, the ECB will not do this. The markets fell on this news with the Dow Jones Industrial Average dropping over 100 points on the day.
The market is being held up by the Dow Jones Industrial Average today. The SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) is trading at $121.26, +0.31 (+0.26%) while the S&P 500 and NASDAQ are both flat to negative. Most average investors will not think anything of this disparity but a true pro will always take note.
The markets are hovering on the flat line today. This is what is called a pause or consolidation day. The SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) is trading at $120.13, -0.07 (-0.06%). A pause or consolidation day tells pro traders that the market may be looking for more upside early next week. This type of pause day occurred on Tuesday, after the massive rally on Monday.
For the average person who invests or trades, saying the news is garbage is a sin. However, it is proven over and over again to be the case. The news is nothing more than a way to take money from the bottom 99% and distribute it to the top 1%. Those at the top control the news and release it to cause certain reactions. Those reactions are carefully calculated to achieve certain goals.
Gold is hanging around an important support level at $1715. If we can bounce off of support here and begin to trend higher it would a signal that gold is uncoupling from the problems in the broader market. The likely scenario is that we head lower with the market retesting the trendline at which point we will be oversold (according to the RSI) and a rally starts.
At exactly the same time yesterday that the markets reversed off their lows, today stocks did it again. The IMF announced they would supply liquidity to European banks in an effort to help them deal with the crisis. Stocks surged from the negative to the positive and are now hovering around the flat line.
Over the past week, the major stock market indexes have rallied higher on light volume. The bulls in the media have been out in full force over the last few trading days shaking their pom-poms and cheering the markets higher. The European debt crisis was being swept under the rug as if it did not exist. High oil and energy prices were being viewed as a positive for the stock market and the U.S.
European news leaks continue to whip the markets up and down. Early in the day, word of a major vote in Italy on a budget drove the markets higher. Hopes of a significant resolution to the Italian debt problems circled in the air. While Berlusconi won the vote, the parliamentary majority was lost. This means any sort of political effort towards a major bailout deal could be a tough fight.
The markets are slightly lower today as all eyes are on Europe. Greece and Italy continue to dominate the headlines as they try and avoid an epic collapse and default. The SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) is trading at $119.06, -0.54 (-0.45%). While the markets are waiting for more news, many tech stocks are showing bearish daily chart patterns.