June 02, 2012 at 11:56 AM EDT
An ugly ending to a bad week and month.
Saturday, June 2, 11:30 a.m. Okay, the market plunged to a new correction low yesterday, in a week that saw the S&P 500 down 3.0% for the week. So it finished off May as a negative month, which followed the down month of April, and a negative second half of March. Almost 5 months of [...]

Saturday, June 2, 11:30 a.m.

Okay, the market plunged to a new correction low yesterday, in a week that saw the S&P 500 down 3.0% for the week.

So it finished off May as a negative month, which followed the down month of April, and a negative second half of March. Almost 5 months of previous gains have disappeared since mid-March.

Short-term, the major market indexes had become short-term oversold beneath 21-day moving averages, making it likely that a brief oversold rally would carry them back up to the resistance at the m.a. But we expected the downside would then resume. 

60212b

Why? Because our intermediate-term indicators remained on sell signals, the major indexes remained in the usually negative lower half of Bollinger Bands, etc.

60212a

And as I showed you in the free section of the blog last Saturday (you can scroll down to it), investor sentiment was not near the level of fear and bearishness usually seen at correction lows, also indicating the correction had further to go.

And the plunge in oil and commodity prices in general has also been saying a lot about what could be expected in global economies and markets.

60212h

Slowing demand for commodities has had commodity prices plunging, which in the past has often been a bad omen for global economies and stock markets. eg.; The CRB Commodity Index plunged 57% in 2008 and the S&P 500 plunged 57% in the 2008-2009 bear market. The CRB fell 15% in the summer of 2010 and the S&P 500 declined 15% in the summer correction in 2010. The CRB declined 19.5% last summer and the S&P 500 declined 21% in last summer’s correction.

Ominously, unlike the U.S. stock market, but more like global stock markets outside of the U.S., the CRB did not completely recover from its decline of last summer, and now it’s back to the downside, down 18% so far from its high in February.

But it is oversold again beneath its 200-day m.a.

Click here to see what I warned about it in my May 11 newspaper column Plunging Commodity Prices Are Ominous For Stock Market! May 11, 2012.

The commodity index does look ominously similar to what has been happening in global stock markets outside of the U.S. Like the commodities index, most global markets outside of the U.S. also did not recover from last summer’s correction, looking like their rally off the October low was just a bear market rally within an ongoing bear market.

60212i

As I say in yesterday’s newspaper column, the time has come if the Fed intends to try to come to the rescue again.

But at least we get a reprieve next week from the recent heavy schedule of U.S. economic reports, with very few scheduled for next week.

To read my weekend newspaper column ‘The Time Has Come Mr. Bernanke’ click here.

Quote of the day.

“An executive mind can make effective plans and execute them, but most people only have half an executive mind. They can make effective plans but can’t execute them, putting them off and putting them off until it’s too late.” Author unknown.

Subscribers to Street Smart Report: In addition to the in-depth information in the premium content’ area of this morning’s blog, the next issue of the newsletter will be next Wednesday in the subscribers’ area of the Street Smart Report website.  But please stay tuned to the hotline in the interim!

Yesterday in the U.S. Market.

It was an ugly day on relatively high volume (1.0 billion shares on the NYSE, and 1.9 billion on the Nasdaq), with the market closing just about on its lows of the day, no attempt to recover it at all going into the weekend.

The Dow closed down 274 points, or 2.2%. The S&P 500 closed down 2.5%. The NYSE Composite closed down 2.3%. The Nasdaq closed down 2.8%. The Nasdaq 100 closed down 2.6%. The Russell 2000 closed down 3.2%. The DJ Transportation Avg. closed down 3.2%. The DJ Utilities Avg closed down 0.8%.

Gold surged up a big $60 an ounce to close at $1,624 an ounce, and up $52 for the week.

Oil plunged another $3.29 a barrel to $83.24 a barrel.

The U.S. dollar etf UUP closed down 0.3%.

The U.S. Treasury bond etf TLT closed up 2.2%.

Yesterday in European Markets.

European markets plunged again yesterday. The London FTSE closed down 1.1%. The German DAX closed down 3.4%. And France’s CAC closed down 2.2%.

Global markets for the week.

Not just an ugly day but an ugly week, the positive week last week after the 3 straight previous down weeks looking quite like a sucker rally to have been sold into.


THIS WEEK (June 1)
DJIA12118- 2.7%
S&P 5001278- 3.0%
NYSE7292- 3.2%
NASDAQ2747- 3.2%
NASD 1002458- 2.7%
Russ 2000737- 3.8%
DJTransprts4911- 3.3%
DJ Utilities464- 0.7%
XOI Oils1,072- 4.2%
Gold bull.1,624+ 3.3%
GoldStcks162+ 3.1%
Canada11361- 1.9%
London5260- 1.7%
Germany6050- 4.6%
France2950- 3.2%
Hong Kong18558- 0.8%
Japan8440- 1.6%
Australia4116+ 0.9%
S. Korea1834+ 0.6%
India15965- 1.6%
Indonesia3799- 2.6%
Brazil53484- 1.9%
Mexico37195- 0.8%
China2486+ 1.7%
LAST WEEK (May 25)
DJIA12454+ 0.7%
S&P 5001317+ 1.7%
NYSE7534+ 1.4%
NASDAQ2837+ 2.1%
NASD 1002527+ 2.0%
Russ 2000766+ 2.6%
DJTransprts5079+ 4.2%
DJ Utilities467+ 0.7%
XOI Oils1,119+ 1.5%
Gold bull.1,572- 1.2%
GoldStcks157+ 6.8%
Canada11576+ 2.6%
London5351+ 1.6%
Germany6339+ 1.1%
France3047+ 1.3%
Hong Kong18713- 1.3%
Japan8580- 0.4%
Australia4081- 0.4%
S. Korea1824+ 2.4%
India16217+ 0.4%
Indonesia3902- 2.0%
Brazil54505+ 0.1%
Mexico37486+ 1.7%
China2444- 0.5%
PREVIOUS WEEK (May 18)
DJIA12369- 3.5%
S&P 5001295- 4.3%
NYSE7427- 5.0%
NASDAQ2778- 5.3%
NASD 1002478- 5.2%
Russ 2000747- 5.4%
DJTransprts4873- 5.2%
DJ Utilities464- 1.7%
XOI Oils1,102- 5.1%
Gold bull.1,591+ 0.6%
GoldStcks147- 2.6%
Canada11280- 3.5%
London5267- 5.5%
Germany6271- 4.7%
France3008- 3.9%
Hong Kong18951- 5.1%
Japan8611- 3.8%
Australia4098- 5.6%
S. Korea1782- 7.0%
India16152- 0.9%
Indonesia3980- 3.3%
Brazil54474- 8.2%
Mexico36875- 5.2%
China2455+ 2.5%

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Next week’s Economic Reports:

Next week will provide a reprieve from potential market-moving economic reports. Only a few are due, including Factory Orders, the Fed’s Beige Book, and the ISM non-mfg Index. To see the full list and times for each release click here, and look at the left side of the page it takes you to.

To read my weekend newspaper column ‘The Time Has Come Mr. Bernanke’ click here.

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