Weak Morning for Stocks, Major Levels in Play

About a week ago I mentioned Fedex (FDX) in the post here: http://vantagepointtrading.com/archives/3717

It talked about how FDX can be used as a confirmation indicator for trends.  The level in the question was the gap which FDX saw in July – early this morning that gap was filled but has since pulled higher, showing some resiliance.  The markets have also pulled off the lows. A close below 78.90 on FDX would be a bearish signal and would add evidence to the downtrends we are already seeing in most major markets.   FDX remains well off its July low which is one positive sign for the moment.

The DAX is the one major international index which has not broken to the downside.  Today it tested the trendline and currently sits right on it.  If the DAX also breaks lower all major index will have turned lower, along with a gap fill from FDX, it provides a strong case that at the moment money should not be in stocks.

It should also be pointed out that October is not a good month for stocks.  We have seen large drops in October before, and it may set up the same way again.   There has been a lot of chatter about this, therefore if a fall where to come it may be seen a little earlier or later.

Another index to look at is the Russell 2000; IWM, the ETF, can also be used.  This index is just above February and July support.  Failure there will show overall weakness.  The Dow and S&P 500 are showing relative strength holding above July lows, yet if the other indexes are breaking, these selective indexes are going to have a hard staying up.

Cory Mitchell, CMT

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