Daily Video Analysis: U.S. Markets Take Another Pounding

Good morning and welcome to CupO’Forex. This is your daily video analysis for Friday, October 10.

Overnight, the U.S. markets took another pounding. The Dow Jones Industrial Average or DJIA saw its worst point drop this year losing over 334 points to finish at 16,659.20. The S&P 500 lost over two percent and the Nasdaq Composite suffered a 90.26 point selloff. Valuations have been stretched but corporate earnings were okay, still investors shrugged those off. There is worry over the slowdown in Europe and with global unrest in the Middle East. Question is: will the DJIA correct further? We will discuss more in our technical analysis

On the economic calendar today, there are not a lot of high impact data hitting investors today. Australia saw new home loans contract further, by -0.9 percent earlier this morning. Investment lending, for personal homes also missed the mark. At 0500 GMT, Japan will release consumer confidence numbers and later today at 1230 GMT, the United States will release import prices. We are expecting import numbers to continue falling as the U.S. export/import numbers are improving. More Americans are buying home made big ticket items, as personal spending picks up.

First off is the Dow Jones Industrial Average. As I mentioned above, it got pounded. We erased all the previous session’s gains and lost even more. We ae now at 16,659.20. A break below 16,650 will challenge 16,500 then 16,000. Valuations remained stretched. A correction would not be such a bad thing. Next up is the USD/JPY currency pair. Our Chief Market Strategist David Frank wrote how there is weakness below 108. This remains valid today. A daily close below 108, which happened overnight, could see us move towards 107.10 then the key technical level at 107.

Lastly, I want to look at Gold. The yellow metal is quite fascinating. We are currently below $1220 per ounce. We did recover as we thought, but have reversed direction. There is a piercing line forming which could mean the sellers are coming back. We will be watching the resistance turned support at 1250 very closely.