Global News and Fundamentals
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Industry, Consumers Feel Pinch as Dow Slips Further
Thu, Oct 16 2008, 20:32 GMT
by Andrei Pehar
fxKnight.com
Last week the Dow broke below the key 9924 support level, re-tested it
as resistance, and continued its downward slide - currently
consolidating into a range between 8487 and 9376.
The effects of the market turmoil are reflecting in fundamental
economic reports. US retail sales dropped by 1.2% and the Philly Fed
Manufacturing Index came in at -37.5, a decline nearly 4 times greater
than analyst estimates. This confirms an earlier figure from the
Empire State Manufacturing Index, which came in at -24.6, also a drop
more than double what analysts had been expecting Overall US
industrial production declined by 2.8% this month.
What's next for the Dow?
It is difficult to say with any degree of certainty. Very likely more
volatility. If 9376 holds as resistance, then we could well see
another move down to test 8487. A break below that level could well
send us as low as 7050, a drop of over 50% since last summer's high.
If instead we can get above 9376, and find some support there, then the
worst might be over - at least for now. The next looming threat is one
of credit card and auto loan defaults, if the economy continues to lose
jobs. More money is tied up here than was in the mortgage markets.
The US Dollar, meanwhile, has remained strong against other currencies
- due in large part to the ongoing liquidity crisis. The rules of
supply and demand still apply, and the LIBOR and Fed Funds rates are
indicators of the current demand for cash. The on-going commodity
sell-offs are another.
Published on
Thu, Oct 16 2008, 21:01 GMT
Archive
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Published On Fri, Nov 21 2008, 21:24 GMT
- Industry, Consumers Feel Pinch as Dow Slips Further
Published On Thu, Oct 16 2008, 20:32 GMT
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