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Market observations from the 558 pt drop on the Dow on Friday

Posted by Greg Tolpigin on 10-Dec-2018 09:36:10

Ongoing weakness in US equities makes the underlying tone seriously negative, especially heading into 2019.

The 2600 on the S&P 500 looks vulnerable and a test of the 2018 lows in the 2550/2532 zone is the next immediate stop.

The move in bond yields continues to be lower (Australian 10's are still the best bet) and higher gold/silver add to the immediate thematic risks. GDX and GDXJ technically look awesome with SBM the best locally. I like the setup on gold and believe more gold equities will follow.

Sub sectors like semiconductors (SOXX ETF) are vulnerable.

Monday continuation of the Friday sell-off is likely - be careful trying to pick a low.

Limited bounce in Europe makes the entire region a "no buy zone".

XJO 5600/5582 is the key. It looks to be building here for an eventual break lower. Best case we fall couple of 150-200 points and rebound for a short term. Worst case we slice through, and start a relentless but orderly persistent downtrend that gives no meaningful bounce to short or sell.

Stocks like RIO through $72 look to be eyeing $66.

AUD looks weak and I see that as an orderly ongoing slide lower.

TCL, NSR, SKI, SYD  - to have underlying bid tone as yields slide locally.

 Start thinking about a weak Xmas retail spending period and its impact on retailers - SUL a great short here.

This will set the tone for the property/mortgage/consumer overhang of 2019.

XJO target remains 4800/4700.

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greg_tolpigin_large_thumbGreg is the Head of Proprietary Trading at Gleneagle Securities and has over 20 years of experience as proprietary trader and high level strategist for the major investment banks including Citigroup, Bankers Trust and Macquarie Bank. He has been involved across all asset classes including commodities, bonds, currencies and equities right across the globe.

 

After a 10 year career with the large investment banks and research firms Greg formed his own proprietary trading firm successfully building the business into a multi-million dollar trading operation that turned over a billion dollars a year. This same team now runs the proprietary trading desk at Gleneagle Securities, risking their own money in line with the firm's and client's capital.

Greg has appeared on CNBC, Channel 9 - Business Sunday programme, a guest columnist for the Australian Financial Review, a regular author for Personal Investor, Wealth Creator and Shares magazine and is the former Treasurer of the Australian Technical Analysts Association.

 

Topics: Trading, Market News, Stock Indices, US Market Outlook, +U.S. Market Wrap, Tolpigin