Bad Month For Dow Jones Industrial Average
Wall Street Daily | Sep 02, 2013 08:05AM ET
The Dow Jones Industrial Average (DIA) and S&P 500
(SPY) fell on Friday, along with other major global stock indexes, to post their worst monthly performance in over a year.
The Dow Jones Industrial Average (DIA) fell 0.2% on Friday, leaving it down 1.3% for the week and -4.5% for August.
The S&P 500 (SPY) declined 3% in August while the Nasdaq Composite (QQQ) shed 1% over the last month.
The Russell 2000 small cap index (IWM) slumped 3.3% over its close on July 31st.
On My Stock Market Radar
The Dow Jones Industrial Average (DIA) and other major global stock indexes were buffeted last week by the ongoing drama over potential military action against Syria. Other forces at work were mixed economic reports, concern over the upcoming Federal Reserve meeting and the future of quantitative easing, and the ongoing economic slowdown in Europe and the emerging markets.
On a technical basis, the Dow Jones Industrial Average (DIA) suffered major damage during the month as outlined on the chart below:
In the chart above, we can see how the Dow Jones Industrial Average (DIA) broke down on August 15th and has already sunk below its initial price objective of 15,000.
Next support lies at the 14,500-14,600 level, and a break below the blue bullish support line at 14,500 would indicate the onset of a new bear market according to point and figure charting.
In conventional charting, the 200 day moving average is the demarcation line between bull and bear markets and it currently resides at 14,434, 2.6% below Friday’s closing level.
Similar action is seen on the S&P 500 (SPY) where the index is below its 50 day moving average and at significant support levels.
Both indexes are approaching oversold levels and so a short term bounce would not be unexpected, however, confirmed resumption of a new uptrend would require gains of approximately 5% from current levels.
Finally, the NYSE Bullish % Index which measures the entire universe of NYSE stocks has registered a bear market confirmation as a result of August’s decline.
Stock Market News You Can Really Use
Get The News You Want
Last week’s economic reports were light and mixed as market participants enjoyed the last week of summer on a low volume trading week.
July Durable Goods Orders fell a shocking 7.3% compared to last month’s +3.9%, pending home sales for July declined, most likely in response to higher interest rates, and weekly jobless claims came in higher than expected.
Good news was found in the upward revision to Q2 GDP to 2.5% and gains in consumer spending, income and confidence, along with an improved Chicago PMI report compared to the previous reading.
The upcoming week will bring an economic data storm along with the sure to be escalating debate over potential military action in Syria.
Tuesday: August Markit PMI, August ISM, July constructions spending
Wednesday: August car sales, Fed Beige Book
Thursday: ADP Employment Report, weekly jobless claims, July factory orders
Friday: August Non Farm Payrolls, August Unemployment report
Friday’s employment reports will be pivotal as they will be the last major data points for the Federal Reserve before its meeting Sept. 17-18 at which many analysts are expecting the beginning of the end of quantitative easing. This meeting will be particularly closely watched as Dr. Bernanke is scheduled to give his press conference at the close of the session.
This Tuesday will also find President Obama in St. Petersburg, Russia, for the G-20 meeting, and this could be interesting as he and Russian President Vladimir Putin stand on opposite sides of the Syrian conflict.
Federal Reserve Presidents will also be on the stump with San Francisco Fed President John Williams speaking on Wednesday and Chicago Fed President Charles Evans and Kansas City Fed President Esther George slated for Friday.
Bottom line: September is an historically weak month for the Dow Jones Industrial Average (DIA) and so fundamental, technical and seasonal factors are sure to be in play, along with uncertainty over Syria and any potential action, inaction or surprises from the Federal Reserve.
Disclaimer: The content included herein is for educational and informational purposes only, and readers agree to Wall Street Sector Selector's Privacy Policy before accessing or using this or any other publication by Wall Street Sector Selector or Ridgeline Media Group, LLC.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.