DEAD CAT HAS NOT REBOUNCED

Yesterday the massacre continued after one day rebounce. Thursday was the capitulation of the bulls and US indices saw their biggest one-day drop since July 31. An old saying is that stocks goes up like escalator and goes down as an elevator was absolutely true yesterday. Since long time we haven't seen a day like this. The dead cat did only short rebound, but the real rally hasn’t come yesterday.

• DJIA – 1.54%
• SP500 -1.62%
• Nasdaq -1.94%

It is not clear what caused this massive sell off. There was no single reason that should warrant such a selloff, making the drop more difficult to explain. Traders and investors blamed high stock prices, the uncertain global economy and international conflicts around the globe. Investors remain concerned about the risk of recession in Europe and about the possibility that Chinese growth may be slower. They worry about Russia and about the new U.S. involvement in the Middle East, the strengthening dollar, which makes U.S. exports more expensive and foreign income to U.S. multinationals less valuable. The dollar Thursday was at its highest level against the euro since November 2012.

Technically the picture hasn’t changed in the last couple of days. The 17.220 is still the key resistance level on DJIA, until is not taken by the index we shouldn’t do anything, just wait and watch.

The BFM Assets Team.