Discouraging Signals in Wall Street
Posted On Tuesday, September 1, 2009 at at 11:34 AM by Finance FanaticAfter what looked to be a rally to open the day on Tuesday, investors have responded with some vicious selling thus far, putting the Dow lower about 160 points currently. I believe this to be a collective response to what we've seen recently in China, as well as threatening deflationary signals with lowering commodities. Oil is struggling once again today, which I believe is the beginning of problems for energy for the next few months. Financials have also taken a beating today, which has caused FAZ to finally have strong day of rallying.
There was mixed news today, which clearly did not settle well with investors. Supply Management's monthly manufacturing index actually rose for August, however, new construction showed a drop in outlays. Future home sales also came in worse than expected, which is a disappointment for the many believing that we are out of the woods for residential. With the mixture of these, the overall belief in the market being very overbought at this point has caused selling throughout all sectors.
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Historically, September has been more of a foe than a friend to Wall Street. Since 1900, the Dow has fallen an average of 1.1% in the month of September. Considering we have been on quite a buying ride in a tumultuous market, and signals are pointing to deflationary down spiraling, September could be a month many would like to forget. Sustained selling for multiple days will be a serious indicator of a turn. Happy Trading.