More selling from nervous investors

By November 3, 2016Jims Notes

The continued slide in the price of crude oil was given the credit on Wednesday adding to the other worries surrounding investors. The latest poll showing Trump and Clinton tied added to the frustrations for the market or at least gave it something to blame relative to the selling. Thus, volatility rose near the 20 level on the VIX again and the broad indexes closed the day in the red. The break of support on Tuesday was confirmed with the addition move lower on Wednesday putting the major indexes in a confirmed downtrend short term.

Gold, in turn, continued higher hitting $1308 per ounce. It is now back at resistance as money flow rises on worries into the metal. Ten-year treasury bond yield drops to 1.8% with increased money flow as well. The flight to safety is gaining momentum.

All ten sectors closed lower on the day with telecom (IYZ) leading the downside adding to the losses after breaking key support on Tuesday. Interest rates have been driving money from the sector along with increased worry about the outlook. Utilities (XLU) added to the move lower along with energy (XLE) and financials (XLF). Five of the ten sectors have broken key support levels along with the S&P 500 index. Closing at 2097 the index is now in a position to retest the June lows. Watching how this unfolds today as the futures are showing a positive start to the day.

Patience remains the mantra for this environment as the data from earnings remains mixed and the uncertainty around the election is adding to the numerous worries and speculation. The shift in the charts on Monday is the current worry for me… breaking support on higher volume technically leaves a big question mark hanging over the outlook. Stay focused and disciplined allowing the market to tell the story going forward.