Morning Coffee, Thursday 12/5/2011

In America:

1. Dow Industrials -1.02% 
2. Dow Transports -1.27%
3. SP500 -1.11%
4. Russell 2000 -1.78%
5. Nasdaq100 -1.76%

Comment: Ouch.  That hurt.  

The Materials Sector -2.66% and Energy Sector -2.89%.   That's an even bigger OUCH - and a big minus for Australia.  The Banking Sector was down -0.98%.  Semi-conductors was down -0.83%.  

Europe:

1. France +0.14%
2. Germany -0.09%
3. London -0.71%

EWA (Australian Shares ETF traded on the New York Stock Exchange) -1.98%, The Australian Dollar was down -1.33% to finish at 106.94 - that's another big ouch.  A strong Ozzie Dollar is needed to maintain the liquidity for a strong stock market.  Gold in Oz Dollars was up +0.33% in the past 24 hours.  That compares with a fall of over -1% in the price of Gold in U.S. Dollars.    

Technical Comment on the SP500:

1. The SP500 finished at 1342.08.  Well above the support of the recent low at 1330.
2. The Index is back below the 13-Day MA (negative) .  
3. Above the 50-Day MA (positive).
4. Indicators:
• Slow Stochastic 56.2.  Falling.  Negative.   (It looks like it needs to get to below 20 before a rebound can take place.)
• The 13-Day MA is above the 50-Day MA.  Positive
• RSI now 52.3 and falling.  Headed for the 40 area?
• MACD Histogram below Zero.  Negative. 
• CCI +26.3 and falling.    Negative.

And the price of oil was slammed last night (-4.57%) - now back below for West Texas.   (Yesterday I said:  This looks to me like a pause before a drop back below 100.)  

The action in America last night was even more negative than the night before.  Support at 1329 beckons.

This will knock the nascent rally from yesterday in Australia.  I doubt the "buy the dips" crowd can save it today.  But, in the short term, I still don't think there's a lot of downside for Australia.  In the medium term, I'm sticking to my mantra "sell the rallies" until I see good evidence to change the chant.

Good luck

Red