Wall Street's post-election sell-off may gather steam in the coming weeks as worries mount about the looming "fiscal cliff" and technical weakness suggests a possible correction ahead.
The benchmark Standard & Poor's 500 closed below its 200-day moving average - a measure of the market's long-term trend - on Thursday for the first time in five months, and ended below it again on Friday. More than half of the Dow components are trading below key technical levels.
At the heart of the market's worry is whether U.S. leaders can come to agreement on some $600 billion in spending cuts and tax increases that are due to kick in early next year. Some fear dramatic cutbacks could send the U.S. economy into another recession.
The prospect of higher tax rates in 2013 is driving investors to sell shares as they seek to decrease the tax impact from their positions this year and next.
Another big negative for the market has been heavy selling of Apple shares. The stock of the world's biggest company, ranked by market capitalization, lost 5.2 percent this week, weighing heavily on both the S&P 500 and the Nasdaq. The stock is down 22.4 percent from its September 21 all-time intraday high of $705.07. (commentary & photo courtesy of Reuters)******************************************************************
Late this week some of RSI’s holdings hit their protective stops. They were DWX and DVY. Aside from that, there are no new RSI picks for the week. There are three potentials funds that I will be monitoring, all in the emerging market sector:
- iShares MSCI Taiwan Index (EWT)
- PowerShares Emerging Mkts Sovereign Debt (PCY)
- Market Vectors Vietnam ETF (VNM)
Don’t run out and buy them, not just yet. We need to wait and see how this post election market plays out. You know the fiscal cliff thing.
I hope you are enjoying your weekend and I’ll be back next weekend.
