The market in New York fell off a cliff late Wednesday afternoon as the indexes declined more than 2%. The Dow closed at 11,147 and the S&P at 1244. This sets up the possibility of the much anticipated big sell off tomorrow and raises the question of possible entry points. I think if we see a real capitulation Thursday and Friday and the averages revisit 10,500, then that might be a decent bottom that would be worth buying into. There's a fair bit of support at 10,500/1180 dating back to 2006, so I can't see the Dow dropping below that level here. If we don't get a big down day tomorrow, then I would be less enthusiastic to get back in for any length of time. In that eventuality, it might take a few more trading days stretching into next week for the bottom to form. Overall though, I'm still expecting this week to be the worst.
Oil recovered a little bit today but stayed down around $136. I think we'll see more downside for the balance of the week.
Gold bounced back $5 to close at $928. After a rough Tuesday that saw an intraday as low as $912, prices are still off last week's levels. Again, I think there is more downside risk here.
