Wednesday, May 16, 2012

Market breaking down ...

Just a few charts to show the ongoing deterioration in the market:

(click on chart for larger image)

Here's the Financial Select Sector ETF which tracks the major US money center banks and institutions.  It's rolling over.  When financial stocks break down like this it does not bode well for the general market.

This is the S&P Retail Index which is a broad based index of leading US Retailers.  I drew a support line which needs to be penetrated before we can say it has definitively rolled over but it's not looking good.

Wait! It gets uglier:

Here's the Consumer Discretionary ETF that tracks those businesses that depend on that extra money we all have :-)

Notice the On Balance Volume indicator in the lower panel taking a nose dive.  This ETF led the market up in the first five months of this year.

Obviously the European debt crisis is the primary catalyst for stock weakness in May but we also have another problem coming out of China where the economic news seems to get gloomier by the day.  And let's not forget the headwinds we will face right after the election with the Bush era tax cuts expiring starting in 2013.  Between these three problems we may be in for a significant decline.