The Closing Look

Stock Market Commentary:

At one point, the Dow fell 565 points on Wednesday before reversing around noon and rallying sharply into the close. Oil prices fell to $27/barrel, plunged over 6% and hit a fresh multi-decade low but also bounced and closed off their lows. Japan’s stock market officially entered bear market territory (decline >20% from a recent high) and MSCI all-country world stock market index is also flirting with a bear market as well.  Overall, the stock market remains very extended to the downside and is way overdue to bounce in the near term.

Gary’s Thoughts:  We wrote to you a couple of times on Wednesday telling you the market was ripe for a washout day and we may just have seen one. NOTHING IS SET IN STONE especially when dealing with the nuts at central banks as well as all the fast money but today’s wide daily price bars finishing near highs for several indices reminds us (notwithstanding the fake open) of August 24th. After that washout, markets stopped going down, edged up before retesting successfully weeks later…that is until the market recently cracked. We do not like micromanaging but micromanage we must right now. Just keep in mind, any rally from here comes out of weakness and is way overdue after 2250 Dow points in 14 days. In no way has the big picture changed. Earnings coming out in droves now so pay attention!