Feb 25

The Market Today 2/25/13: Outcome



The last four day’s in the market have been strongly negative. Today’s move, the outcome was a result of mainly the election results from Italy. At first the move started out as positive. This outcome was deemed positive at first, due to the fact that former Italiian Prime Minister would lose.  As the morning progressed, Silvio Burlesconi made a roaring comeback, and won. This reaction has broad negative reactions. This is due to the fact, that the people are voting against austerity, and against the agreement with the IMF, to help Italy weather this economic storm. This clearly puts this agreement and jeopardy, Also, this has broad implications with other periphery nations. With other nations already agreeing to the IMF austerity measures, this could cause them to reverse their decision, and cause the whole continent of Europe to deep recession. This would also cause problems globally. Should the entire continent of Europe fall into deep recession, this will hurt the US economy, as well as Asia. From the GDP numbers released last month showing negative growth here in the US, this could cause the growth to slow even further, and the outcome of this could be a severe downturn in the stock market.

Outcome: Continued

On top of the Italian elections, we have the sequestration issue here at home. Should the Government not come together, and work out a solution, the outcome could be catestrophic!! In and of itself, it would not be catestrophic, but combine this with the Italian situation, Europe nosediving as a result, and the US debt ceiling on top of all this, catastrophy is not too far in the distance. As i have pointed out in earlier, the volume on the later stages on the advance was low. On the first big volume day last week, we saw a big sell off for the two big volume days on Wednesday and Thursday. When Friday came along, we saw the bulls come to life, and start buying, and closed at the highs of the day. This was good, but volume was not strong, as it was in the previous two selling days. This morning, it looked as if the buying was following through, with what looked like a positive outcome in the Italian elections. What I mean by positive, is that the election results would come out in the markets favor. As I have mentioned, this did not work out, and we saw the selling come in, and come in strong.

Outcome: Technical look at market

Let’s look at the technical outcome to today’s market reaction.The market appeared to try and rebound from the losses seen last Wednesday and Thursday. The close of the market was above 1.500. It closed Friday about 1,515, then went as high as almost 1,526, within an earshot of the high last week at 1,531. As I have mentioned on previous posts, support was at 1,490, then 1,460. Today, the market closed below the 1,490 support. This is obviously bearish. I had also mentioned that pull backs were healthy. For now, today’s outcome does not change this. A close below the 1,460 does however. So this is the level that we need to keep a close eye on. With the sequestration issue coming to us this Friday, this week the market will be walking on egg shell’s, and could very well test the 1,460 level this week, or early next.

Author Sean Rhodes is an expert in financial markets and helping you manage your money.  For a no-risk consultation, check out Sean at the following link for more information and expert advice on investing in equities and  being able to react to any outcome from global situations.

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