Dow Jones Industrial continues suffering from bad local data

Dow Jones Industrial goes down again and again

In brief: U.S. stock market is volatile enough today. Bears are the owners of the current trading.

Dow Jones Industrial is fallind deeper in red zone. Traders can’t take a serious transaction, so the support level for the Dow index drops. Dow index is 10,283.66 points. Yesterday’s stock market session on the U.S. shifted its focus areas. During the day we noted the rise of the index S & P500, represents the combined value of shares of the 500 tons the largest U.S. companies, to mark 1,130 points, which corresponded to 50% bounce from the bottom (1040) for the Fibonacci sequence. DJIA is waiting for a good news.

After achieving the first goal on the horizon is viewed next resistance level at 1,152 points (61.8% of Fibonacci) to test which the index remained broadly the market to go no more than 2%. But not here, it was. Even before the discovery of American trades from Europe came disturbing reports that European policy at the summit in Brussels had agreed on the introduction of the second half of the tax on a number of banking transactions in the euro area and the tightening of regulatory measures in the financial sector. Parallel actions launched a new British government, claiming additional taxes on banks next year. Conservatives faced with swollen to nearly the size of the Greek budget deficit can understand, but the bank that does not help. Annual incremental costs in billions of euros and pounds will increase the load on the balance sheets of financial institutions already are not yet fully recovered from last year’s crisis. Investors have responded to these plans are friendly dump shares of banks and companies of the financial sector, thus pushing stock indexes to the south.

The second blow exchanges received from the American real estate market, when it became aware of the fall to 2.2% of sales in the secondary housing market in May, while analysts predicted an increase in the number of transactions by 5,5%. In the past month has sold 5.66 million homes in annual terms from 5.79 million in April. At the same time the median home price rose to $ 179.6 thousand compared to $ 172.3 thousand a month earlier (+ 3,7%). Equally discouraging results from buyers, which is still subject to tax incentives, no one expected. However, in explanation of weak sales of real estate brokers referred to the delay in issuing mortgage loans by banks in connection with a large number of applications and lower cost of real estate in the southern states that go to the Gulf Coast. The latter has led to many potential buyers out of contracts already signed.

Whatever actually happened, but the financial noose, thrown over bank assets, and disappointing U.S. housing market rattled gamblers who like submitting to the invisible conductor, en masse rushed to close long positions and go into the cache. Under pressure from the crowd sellers stock indexes fell into a tailspin, and breaking through the lower boundary of the range, fell below the psychological strips in 1100 points for the index S & P500. Given this circumstance, I see two possible scenarios for future market dynamics. First, if the text of the final statement after today’s meeting, the Fed will reassure investors and the broad market index hold out above the support level of 1,085 points, it is very likely to return to the uplink. The second scenario is more pessimistic, in the event of changed the tone of the final Steytment and out of the phrase an exceptionally low rates for an extended period of time. Then the inevitable retreat of the index S & P500 for the last bastion of support in the area of 1078 points, beyond which looms the June bottom at around 1,040 units. Which of the two scenarios will involve the market, it will become clear within a few hours.

Igor Tringlers
2010-06-23 17:12, Economics.

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