Intra-Day Reversal

Wednesday, January 03, 2007 | 03:32 PM

It’s rarely any one single element that leads to major reversal such as we saw today. However, we can identify a half dozen elements today are significant and contributed the mid-day sell off:

1) The intraday reversal was set up by the opening exuberance and emotional New Year buying – not fundamentals.

2) The drop in Copper and Oil is reflecting a slow down in the United States economy; The CRB Index broke support at 300

3) ADP data – which in the past has been none too reliable -- surprised to the downside significantly;

4) Both Ford and GM saw sales declines of 13% in December;

5) ISM remains near the flatline, as Manufacturing is still struggling with inventory and decreased demand; (who is all excited about 51% and change?)

6) FOMC minutes reveal inflation remains the primary risk to the economy, even as it shows signs of being a "touch softer" than the Fed previously believed.

Note that the selloff in equities began an hour prior to the FOMC minutes . . .

It's still early, and after dropping 150 points, equities are clawing back. Regardless, today is quite interesting.

~~~

UPDATE January 4, 2006 5:55am

Trader Mike has a good couple of charts and several worthwhile links to those who are interested in the Technical underpinnings of the reversal . . .   

Wednesday, January 03, 2007 | 03:32 PM | Permalink | Comments (40) | TrackBack (0)
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Comments

gotta think today's volatility is going to make people pause.... esp since we haven't seen such volatility for a while.

Posted by: emd | Jan 3, 2007 3:44:25 PM

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