Yesterday we did gap up at open, but from there we lost ground due to the plummeting financial
sector. The gap up was typical of the moves that we have been used to over the last 6 weeks. Large move up and then consolidate.
But as we wrote about yesterday, we are move concerned about the lack of strength over the last week with our movements. We are showing negative divergence in the MACD and the RSI on lower and lower volume. This continues to show weakness and this means a possible short term pull back. Since we are using a 60 minute chart here, let’s keep things in perspective. We are talking about short term pullback.
A gauge of home prices in 20 large U.S. cities is likely to dip in August, reversing four straight months of gains, as the weak economy caused buyers to shy away from purchasing homes. This and poor earnings reports will cause us to open lower this morning. World markets were lower Tuesday as European corporate earnings mostly left investors disappointed ahead of more releases from the U.S. and Asia.
Although many companies are reporting fairly healthy profits for the last quarter, their outlook is often dampened by expectations of an economic slowdown, particularly in Europe, where households are becoming cautious about spending and governments are making sharp austerity cuts.