Break from trading gives an international perspective
Break from trading gives an international perspective

Break from trading gives an international perspective

The US and British markets are closed today, US for observation of Memorial day and a Spring Bank Holiday in the UK. This gives US investors a time to see what the world markets do without US economic news and fundamentals affecting trade. With all the talks of the credit crunch and problems in bank liquidity, the world markets have succumbed to the control of the US markets. Bad news in the US sends the world markets down. Banks across the world have acted to infuse more money in an attempt to keep the US dollar’s value up.

Giving the market time to operate without the US economic pressure is good. For one, US news has largely dominated the international scene, making it almost impossible to follow along with international news that hasn’t particularly driven the market. Also, US crude commodities markets were closed, keeping oil news out of the market for freshening 8 hours. Since the oil market wasn’t open for trade in the US, international interests didn’t have to deal with the new highs and lows of oil and thus traded without worry of commodity prices for a sweet 8 hour window. Anyone can appreciate that.

But the best part about a US holiday is to how the world markets move. The markets reacted negatively, the Nikkei was down 332 points to 13,609 while the DJ Stoxx 50 measuring the European markets was off by just 7 points to 3162. The markets continued the downward spiral from Friday’s US trading, but that’s ok, its nice to see action based solely on localized areas that action upon worldwide (US) news.

Its probably a good thing US traders were enjoying a holiday. Last huge sell off occurred at the same time of the Martin Luther King Jr holiday that kept the US markets from falling in a similar fashion to the rest of the markets. Holidays so far this year, have worked out spectacularly for the domestic markets and created huge losses around the world.

The Dow still has a bit of a consolidation period to work out. Support doesn’t come until the price hits 12000 where a 5 year old trendline should come in and give it support. Within the next few weeks I’m assuming we’ll see a drop to the 12000. Further movement through 12000 would be scary, the next support is now where to be found, it would probably be another 500-800 points before the market was buffered again.

A bounce off 12000 would be welcome in this market climate. The US markets have been lagging with high oil prices and bad economic indicators. When the $155 Billion in stimulus checks begin hitting the corporate balance sheets, lets hope that positive news boosts the market out of its misery, even if only for a few weeks. Corporate earnings should look very strong this summer, let’s hope a bounce of 12000 is followed with strong earnings, otherwise we’re headed back to 11000.