What’s Tanking in the Market and Why

by John Lansing | October 9, 2012 2:00 pm

What’s Tanking in the Market and Why

Futures are gapping down after Friday’s bearish sharp reversal, and here’s why: 178 companies have now warned, marking this the highest level of pre-announcements — or what we call “earnings warnings” — all the way back to 2006.

Prices at the pump are hitting record levels in California, topping $5 a gallon, along with the surge in unleaded gas. Now, for those of us who don’t live in California, prices at the pump haven’t yet increased to the levels of our West Coast friends, but it still looks like it’s only a matter of time[1].

For the first time going all the way back to July 2012, Apple (NASDAQ:AAPL[2]) closed below its 50-day moving average. In early pre-market trading today, AAPL — which makes up 20% of the NASDAQ 100 and 5% of the S&P 500 — was down another $6 a share, or about 0.9%, though the losses narrowed by the afternoon.

10 9 12 50day What’s Tanking in the Market and Why

Commodity prices in everything continue to be under pressure after the World Bank has lowered Asia’s growth outlook[3] as a global recession has significantly increased, consequently forcing the World Bank to slash China’s growth outlook by 50 basis points.

Copper took out the lows of all trading days last week as it dropped another 1.8% in the overnight session.

10 9 12 forexCopper What’s Tanking in the Market and Why

Silver futures acted even weaker, taking out the past two weeks in price action as they declined another 2% in overnight trading.

10 9 12 Silver What’s Tanking in the Market and Why

Gold futures were not far behind in terms of weak price action.

2012 10 09 Gold What’s Tanking in the Market and Why

While every senior index futures contract took out Friday’s lows, the weakest continued to be tech as the Nasdaq futures had taken out the past three days of trading, flipping into a new daily bearish trend reversal.

2012 9 12 NASDAQfuture What’s Tanking in the Market and Why

Not far behind in terms of weakness were the Russell 2000 futures, which also remained in a bearish trend reversal on the daily chart.

2012 10 8 Russell2000 What’s Tanking in the Market and Why

I’m no permabear, but I’m seeing technical breakdowns everywhere after last week. Take advantage of them with some short-term put trades.

Commodities and futures charts courtesy of ForexPros.com[4].

John Lansing tracks the charts all day and offers expert technical analysis in his day trading, options and trading services: Power Trading at the Open[5], Parabolic Options[6] and Trending123[7].

  1. only a matter of time: http://investorplace.com/2012/10/market-watchers-beware-the-pump-unleaded-gas/
  2. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  3. World Bank has lowered Asia’s growth outlook: http://www.nytimes.com/2012/10/09/business/global/world-bank-predicts-asian-recovery-in-2013.html?_r=0
  4. ForexPros.com: http://www.forexpros.com/charts/real-time-futures-charts
  5. Power Trading at the Open: http://powertrading.investorplace.com/
  6. Parabolic Options: http://parabolicoptions.investorplace.com/
  7. Trending123: http://www.trending123.com/

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