3 stocks pulling down the Dow
As the government shutdown continues and the debt ceiling approaches, the most heavily weighted stock in the average is in free fall.
With the major averages falling through major technical support levels -- the 15,000 mark on the Dow Jones industrials ($INDU) and the 50-day moving average on the Standard & Poor's 500 Index ($INX) -- and no resolution to the fiscal fight in Washington forthcoming, now's the time for traders to start looking for opportunities on the short side.
More and more are appearing. Stocks within the S&P 500 are falling out of uptrends at a pace not seen since the market swoons in June and August.
Cyclical, economically-sensitive stocks are rolling over at a pace not seen since June. Capital is flowing into safe haven assets like precious metals and Treasury bonds.
Here's a look at three Dow 30 components that look ready to slide lower -- and pull the rest of the market down with them.
Shares are dropping out of a multi-month consolidation pattern going back to April. More dangerously, this pattern is a continuation of a narrowing trading range that started in early 2011. The support line drawn above mirrors the stock's 200-day moving average. Tuesday's breakdown represents the first time CAT has moved below this level since early 2010.
In response, I'm adding a short position in CAT to my Edge Letter Sample Portfolio.
The energy giant is watching as its shares fall below their 200-day moving average for the first time since December as it tests lows set in April, June, and August. Shares are now approaching their 50-week moving average, a level that hasn't been breached since late 2012.
International Business Machines (IBM)
Most importantly, the most heavily weighted stock in the Dow Jones Industrial Average is in free fall. IBM has spent the last two years sliding sideways near $200 a share, which an excursion towards $215 back in March that helped lift the Dow for 10 consecutive days that month.
Now, IBM's outsized influence (due to its high share price and the Dow's price-weighted construction) is working in reverse.
How severe is the decline? On a weekly basis, we're looking at the strongest downtrend in IBM since late 2008.
That's right. For the most important stock in the most closely followed stock market measure, we're in the midst of a financial-crisis style selloff.
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Also, is anyone else sick of these friggin Fidelity ads on the right side of the article, the ones that take up half the screen if you happen to roll over them, and start playing an annoying video? I don't know who the marketing genius was that came up with these pieces of crap, but just to let you know, every time those ads expand, I HATE Fidelity just a little bit more.
Today was not a great day, nor even a good one...Didn't really buy anything, maybe a few days more.
Yes those ads are annoying.
Long before the Debt Ceiling and the Gov't Shutdown, folks have been expecting a major Correction due to slowing earnings growth and rising Rates. Now rates have reversed along with gasoline prices. To counter those two last positives for the Stock Markets, the risk of Default looms. In a Nutshell, it's difficult to determine any Reality to an already heavily Manipulated Bull Run. It's difficult to determine real earnings growth when Companies are engaged in massive Stock Buybacks via Cheap Credit.
We can always assign this or that to why the Markets move higher or lower but we can rarely prove it. You can't rewind the clock and see what the Markets would have done by adding or subtracting different factors. However, in the FACE of an incompetent Government and Big Banks that don't know Real Business from Fake Ones, Old or New, the FEDS will keep Printing to infinity until the whole things Blows Up. For some Americans, it already has.
"I realized after today that we have a threat to our country far greater than any foreign threat or chemical threat in the history of our nation. Our government is our worst threat..."
We the People are our government. The THREAT are lobbies, parties, PACs and the other political devices separating We the People from our elected Officials. It's time for stupid people to wake up and recognize what's going on here. The military went back to work without the funds in our Treasury for pay days. Wall Street still functions while our currency is dead. 90 MILLION fellow Americans live suppressed by the lack of family sustaining jobs while non-participants in our economy become game token millionaires. We owe $632 TRILLION in prioritized derivatives contracts. The President doesn't have a thing to do with that-- but YOU do. Everyday you play in the markets, your moves are borrowed because there is NO economy. Get OUT of the markets and MAKE economy now... while you can. EIGHT DAYS.
Near term bad news anticaped - - Ignore it too. Upcoming sales, inventory, profits, etc. are almost sure to disappoint and may send shares below $80. Ignore the noise and hysteria and baseless emotions. Do NOT panic and dump. In fact, pull the dump lever on the cash truck and grab Cat below $80.....then hang on for solid, delightful, long term capital gains along with wonderful dividends as the construction and mining escalator goes straight back up!
It's time to put all Democrats in Concentration camps!
We need to isolate them and control their breeding... or these genetic mistake will destroy America!
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An interest rate tease in The Wall Street Journal sends the market into an optimistic tizzy -- but one that doesn't end quite at the top.
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