Courtesy of John Nyaradi.
Major U.S. stock market indexes consolidate lower as Italy and Europe simmer
After Friday’s big gain, global markets drifted within a tight box with the Dow Jones Industrials (NYSEARCA:DIA) giving back 0.6% and the S&P 500 sliding -0.95% (NYSEARCA:SPY).
Worries turned once again (we have heard t his before) to Europe (NYSEARCA:EFA) which lost 1.8% and Italy (NYSEARCA:EWI) which dropped 3.4%. Specific worries came after Italy sold three billion Eurodollars worth of five year bonds at a yield of 6.3%, the highest level for these notes since 1997. Spain added to worries with record rates on its beleaguered ten year bond and its index (NYSEARCA:EWP) sunk 3.6%.
Nothing changed on a technical basis as we move along this sideways channel. This will break out of the box one way or other and likely it will be sooner than later and largely dependent on action in Europe. With S&P 500 valued at 12 times operating earnings and favorable seasonality, the likely direction is up unless Europe disintegrates.
Tomorrow’s Action:
Tomorrow brings October Retail Sales, October Producer Price Index and September Inventories.
Have a great evening,
John
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