Oil Drops, Stocks Lower As Markets Wait News on Financial Bailout

DJIA - 161.52, -1.47% SP500 - 18.87, -1.56% NASDAQ Comp. - 25.65, -1.18% Russell 2000 - 11.25, -1.56% Exchange NYSE NASD Advancing 872 1,021 Declining 2,220 1,870 Oil $106.61 -$2.76 Gold $891.20 -$17.80 $SOX 312.67 -5.85 Strongest Sectors: XLK -0.05%...XLF -0.29%...XLP -1.34% Weakest Sectors: XLE -2.31%...XLV -2.37%...XLB -2.33% Sector Watch Up Trending: Sideways: XLK, XLI, XLV, XLP, XLY Down Trending: XLE, XLU, XLB, XLK The selloff in stocks slowed on Tuesday and technology and financial were the strongest sectors and were near breakeven for the day. After the markets closed Buffett took a major position, $5 billion, in Goldman Sachs, GS, which sent financial stocks and futures higher in after market hours. Don't be surprised if markets are higher in the morning. The November oil contract dropped from $109.37 after the October contract had surged over $16 on its last trading day on Monday in part due to short covering on the closing contract. This sent inflation related stocks in the oil, coal, gold steel, basic materials and Ag-related stocks lower today.

As the details of the financial bailout get negotiated don't be surprised if the market moves significantly higher. Think about it. Look at the trend of the financial sector XLF. The trend stopped moving down on July 15, starting moving up and in many individual stocks the trend is actually moving up. Look at stocks like BAC, WFC, JPM, USB, STI, CB, RF, ZION, CPF, BBT, CTBK, PACW, TRMK and ETFs KRE and KBE.

Buffett's financial commitment to GS should also be a clue of the potential for the financial sector.

HANS closed above resistance on Tuesday and has a chart target of $37.50+.

Index Commentary The DJIA stayed above S1 of Thursday’s candle…watch this support level and the R1 resistance of Monday’s candle. The SPX stayed above the S1 level of Thursday’s candle…watch S1 support and the R1 resistance of Monday’s candle. The Nasdaq was relatively stronger on Tuesday and stayed above the mid-section of Thursday’s candle or the S2 level…watch this support and the R1 of Monday’s large black candle. The SOX fell within 5 points of last Tuesday’s low…watch to see if this index forms a double bottom as confirmation if the Nasdaq index reverses trend and begins moving up. The RUT again fell below its 50 and 200 DMA and closed well above last Thursday’s S1 level…still in a sideways trend…watch the S1 support level and the resistance areas of the 20, 30, 50 and 200 DMA as well as the R1 resistance of Monday’s candle.

Tuesday’s Action Moving Up: GS, V, HANS, FMCN, MS, GRMN, FNM, FRE, Moving Down: POT, FSLR, MOS, CF, CNX, AGU, X, DRYS, BIDU, CLF, AAPL, LDK, PNRA, ESRX, DECK, PCLN, MON, FWLT, MA, BTU, SINA, IPI, SCHN, SOHU, MER, BUCY, ANR, MEE, AEM,NUE, GDX, MTL, INFY, STRA, BRCM, LAMR, RIMM, ONXX, IBM, COH, CELG, NDAQ Intermediate Term Market Trend: Neutral Short Term Market Trend: Neutral