Market Indices - Panic at the Disco!

Yesterday saw another rush for the exits in all market indices.  Equity markets have taken a very dim view of the bureaucrats ability straighten out the economies of the world.

 The Naz has been pummeled for 15% since the end of July.  Yesterday it lost important support at 54, setting a double top.  With the indicators extremely oversold, the Naz is set up for a "rip your face off rally."  54 would be tough resistance setting up a reasonable spot to go short, should the market get that high.

The longer term chart clearly shows the trendline break.  The Naz is currently sitting on the 200 week ema which might be a good spot for the "Ripper."

The S&P 500 has fared a little worse than the Naz (down 18%) due to have more financials included in the index.  The longer term indicators are nearing oversold territory suggesting the worst may be over for now (or at least not as violent selling).

One of the purported reasons for the sell-off was a downgrade to the US's credit rating.  Apparently the flight to safety encouraged investors to shrug off the downgrade and buy Treasuries which were up on the day.  Interest rates have been on a steady downtrend as seen in the chart above.  10 (1%) on the 5 yr is the bottom of the base.  A bounce from here would set up positive divergences on the indicators.  Long at 11 with a stop at 9.5 would be the play here, however, that still leaves a potential 15% loss.  Not necessarily a great risk/reward scenario.

The US Dollar also got a lift yesterday, contrary to what might be expected from the downgrade.  The lift might be temporary as it still looks like the USD is in a potential bear flag.  The long term indicators have been recycling for the last 6 months without much pick up in price.  The USD will also face some resistance at the 20 week ema near 75.2.

Surprisingly, the Euro looks to have better upside potential.  It is setup in a potential triangle.  If the indicators unwind a bit more 139.5 would be a good spot to go long, with a stop at 137.9 setting up a good risk/reward trade.

Lastly, the asset that expects all currencies to devalue, gold, continues on a tear.  It has broken out again into uncharted territory.