Wall Street ends down but not out
by Peter Switzer
Another rough day at the office for Wall Street but as regular readers might recall I have been tipping a sell-off or a retracement, though I still don’t expect a massive dumping of shares.
Remember, the S&P 500 is up 26.7 per cent since October and up 10.7 per cent since the start of the year and the German Dax has put on over 30 per cent in this current rally. That cannot go on forever and markets will eventually find a reason to sell. The manufacturing data out of China and some weak European manufacturing figures were the trigger for the Dow dropping 78.48 points, or 0.6 per cent, to 13,046.14 and the S&P 500 giving up 10.11 points, or 0.72 per cent, to 1392.78.
Concerns about Europe
Also, out there to bite this over-confident US stock market are question marks over Spain, its debt and its very high unemployment rates while the Iran/oil price issue simmers away, but it could boil over this year and scold some investors.
All that said, the Dow is still on track for the sixth month in a row of rises.
In simple terms, Europe we know has a recession in train and China is looking weaker than expected and that hits commodity prices.
From my point of view, this should help the dollar slip and it’s now at 103.81 US cents. The softer economic news should help the Reserve Bank cut interest rates, which will help a lot of industrial stocks in the S&P/ASX 200 index.
Wall Street overnight
Overnight, BHP Billiton was down 2.04 per cent and that’s not going to help the local stock market today, so brace yourself for a weak day of trading here in Australia.
Reinforcing my view that we’re overdue for a share sell-off was my interview with Lance Lai — my charts guy from Accountancy Invest — who reveals the techncials say gravity is set to take over but he expects an orderly trend down. Only a left-field shock event could turn it into a serious correction.
Either way we will be looking at a buying opportunity for the long-term investor. So all I can say is — watch this space!
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Published on: Friday, March 23, 2012
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