Bulls Skating on Thin Ice

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Stocks fell again on Wednesday in a volatile session that marked the fourth loss in the past five days. The Dow Jones Industrial Average fell 0.3% and the S&P 500 closed down 0.2%. Traders appeared nervous as stocks oscillated between slightly in the black and slightly in the red.

Worries over a lack of growth in China dominated trading. A government report showed a measure of the country’s factory output fell to the lowest level since March 2009. This is yet another indication that China is struggling to meet its 7% growth target for 2015.

An HSBC economist was quoted in The Wall Street Journal saying, “New export orders have really collapsed. It means global trade is facing headwinds, and even China can’t escape that.”

Crude oil fell 4.1% to $44.48 a barrel, and commodity-sensitive stocks were the poorest performers. The energy sector dropped 1.3% while materials lost 2.1%.

The Mortgage Bankers Association said home loan applications jumped 13.9% last week after falling 7% in the prior week.

The yield on the 10-year Treasury note rose to 2.14% from 2.13% on Tuesday.

At Wednesday’s close, the Dow Jones Industrial Average was off 51 points at 16,280, the S&P 500 fell 4 points to 1,939, the Nasdaq was down 4 points at 4,753, and the Russell 2000 lost 3 points at 1,140.

The NYSE Composite’s primary exchange traded 782 million shares with total volume of 3.2 billion shares. The Nasdaq crossed 1.6 billion shares. On the Big Board, decliners outpaced advancers by 1.4-to-1, and on the Nasdaq, decliners led by 1.3-to-1.

Dow Jones Industrial Average Chart
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Dow Jones Transportation Average Chart
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Chart Key

The charts of the Dow Jones Industrial Average and Dow Jones Transportation Average present a nasty picture for the bulls. They are each marred by heavy selling, a death cross, a broken ascending wedge and an intermediate downtrend with a new MACD sell signal.

Conclusion

A break below the October closing lows — 16,117 on the industrials and 7,717 on the transports — would seal the deal for the bears. The bulls are skating on very thin ice.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.


Article printed from InvestorPlace Media, https://investorplace.com/2015/09/daily-market-outlook-bulls-skating-on-thin-ice/.

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