Quick review of financial markets' action today

Many of the markets we follow moved toward, and in some cases underneath their 50-day moving averages. Equally bearish, or perhaps more so, both the Dow Jones Industrial Average ($INDU) and the S&P 500 ($SPX) equity indices moved under not only their 50-day moving averages but also their 200-day moving averages. As I "tweeted" during the day on Twitter, the P&F charts for these two indices as well as the Nasdaq 100 ($NDX) are showing bearish targets. In the case of the $INDU, it points to that round number, 8000.

**Update note (6:20 pm) - For all who noticed that today's ChartsEdge forecast "map" didn't exactly match the action today - this is a great time to remind you that we use these for intraday cycle timing. These maps are not to be relied on for intraday relative price levels. Sometimes they point rather well to intraday price levels, but not always, and especially not when there is an intraday bias that "skews" them. So for example today, you saw relative high and low points that synched up rather well in terms of timing with the map, but they didn't express with relative higher/lower price levels due to the intraday bearish-trending bias. (More information about these maps is at the ChartsEdge site, and I've also included much of that information at my "No Bull No Bear No Bias" site - see links for both, at the right side of the page.)

From an Elliott Wave perspective it will be important to see whether this drop down is equal to, or greater than the drop into Wednesday's low from the prior week's high. This is because we are thinking of this as a third wave movement following that initial drop as a first wave and the upward movement late last week as its second wave. Even if we are right, there are a couple of things to remember - one is that this would still be the third wave of a larger wave 1. The other is that it also depends on whether the markets are rolling over to new lows, or merely to the pullback down to a right shoulder of a bullish inverse head and shoulders that many are talking about nowadays.

So we can just focus for now on whether the current drop will reach to, perhaps 1.618 of the length of that initial first wave into last Wednesday's lows. The 1.618 measurement is common for third waves (not an absolute rule).

In other things we like to keep an eye on - the Dow Transports ($TRAN) fell 4.67%, well under the 50-day moving average. The semiconductor index, about which I warned in a post here recently (saying that it's more likely to lead the markets down than up), fell about 3% although not violating 50-day moving average support yet.

Oil as measured by USO fell under its 20-day moving average - and remember, NYMEX futures expiring today make it interesting to ponder whether and when the speculation that's been driving the oil price up, will "catch up" with the realities of supply/demand and perhaps act as a drag on the market when the speculation needs to unwind. Which reminds me of natural gas - I know a lot of people have waded in on this recently, which concerns me. Maybe that long-side speculation will work out, but it fell over 3% today. UNG fell under but then rose again to close at its 20 and 50-day moving averages - still down net 3.36% today, but maybe it gets support there. If not, then I would be concerned about seeing new lows around $11/$12 or less in that ETF.

Financials - yuck - the XLF (common ETF for the financials) fell under its 50-day moving average too. As did the banking index ($BKX), and it's looking like the BKX 20-day moving average may cross under its 50-day moving average very soon (maybe tomorrow).

In currencies, it was interesting to see not much intraday range, but the dollar and FXY (yen) were higher, the euro lower. (You see, Tyler? you didn't need to worry about the dollar, when it dropped on Friday it was only to support!) The dollar's 50-day moving average has swooped down by the 200 dma, so we've still got to keep an eye on it. And the bond ETF tracking US Treasury bonds, TLT, moved above Friday's high, closing up 0.97%.

Gold as represented by GLD also had little intraday range, but this ETF closed down 1.48% and moved under its 50-day moving average. This means that the continuous contract, $GOLD that I chart, will have fallen under the support trendline on my daily chart.

Gold stocks also were down, among some of the biggest stock losers today (along with stocks of basic materials and energy companies).

Did I mention that real estate as measured by IYR was down over 5% and also under its 50-day moving average? And, is anyone surprised?!!

Retail was down, with the ETF called RTH closing down 1.33%, and I'm just surprised it didn't move under last Wednesday's low - which helped stave off its 20-day moving average from crossing under its 50-day moving average, quite yet.

Emerging markets were down also, some of those apparently tied to drops in commodities prices.

Apparently the only stock sector positive for the day were the utilities, not exactly a bullish sign.

But of couse, one day doesn't make a market. So we won't let this get us "married" to either alternative, the "new lows come next" camp or the "not dead yet, merely a pullback before new rally high" camp. It's okay to harbor a preference, just don't get locked in yet as it's too soon. Even the bearish P&F projections I mentioned earlier for the major U.S. indices are only to P&F support levels that can be consistent with that second, "pullback" alternative. We'll let this continue to play out for a few more days and see what the wave action and technicals are saying.

(click image to see larger)