Morning Coffee, Friday, 6 May, 2011

In America:

1. Dow Industrials -1.1% 
2. Dow Transports +1.14%
3. SP500 -0.91%
4. Russell 2000 -0.44%
5. Nasdaq100 -0.52%

Comment: The SP500 has been down four days in a row.  Volume has increased each day.  Breadth in the market (small caps) and transports has improved with the fall in the oil price.  The SP500 is in a Zone of Support.  If this is going to bounce, now seems like the time.

The Materials Sector -1.17% and Energy Sector -2.08% were both down.   That's a minus for Australia.  The Banking Sector was also down -1.33%.  Semi-conductors flat (again) +0.15%.  

Europe:

1. France -0.95%
2. Germany +0.04%
3. London -1.07%

EWA (Australian Shares ETF traded on the New York Stock Exchange) -1.53%, The Australian Dollar was down -1.49% to finish at 105.86 - falling well below the 110 region.  It is also into a Zone of Support (104-106).  A strong Ozzie Dollar is needed to maintain the liquidity for a strong stock market.  Gold in Oz Dollars was down -1.69% in the past 24 hours.  That compares with a fall of over 3% in the price of Gold in U.S. Dollars.    

Technical Comment on the Dow Industrials:

1. The SP500 finished at 1335.1.  In support zone.
2. The Index is below the 13-Day MA (negative) but still above the 50-Day MA (positive).
3. Four days down in a row and accelerating.  (Time to put the brakes on?)
4. Indicators:
• Slow Stochastic 68.1.  Below 80, below its signal line and falling.  Negative.
• The 13-Day MA is above the 50-Day MA.  Positive
• RSI now 50.5.  Falling but still above 50 (just).  Neutral.
• MACD Histogram at Zero.  Neutral.  But falling. 
• CCI +14 and dropping.    Negative.

And the price of oil dropped sharply last nigh (-9.16%) - now below 100 for West Texas.   That's a blessing and a curse.  The good news shows up in the Transport Index - and can be read as good for the consumer and the American economy.  The bad news is that it may be reflecting a weakening global economy. 

It's Non-Farm Payroll Report tonight in America.  (The Jobs Report.)  A poor report tonight could put the nail in the coffin.  A good report - and we could see the end of this retracement.

Today in Australia?  Who knows.  Maybe the "buy-the-dips" crowd will prevail once again after an early sharp dip.   

Good luck

Red