And just like that its gone. The 2% gain and the 200 pt Dow rally from yesterday's feel-good GDP news is erased. What happened? The bulls had the perfect excuse to stop the slide and restart their upward trend? In the matter of 8 hours, the markets managed to dive so low that they actually LOST ground for the month of October! First time that's happened to the Dow since February 2009!
So what's due for November? Keep an eye on a few things next week for indications:
(1) 2041 is a key support level for the Nasdaq. Keeping in mind that financials and techs have been market leaders during the rally, if this support level goes, that's bad news for the markets.
(2) Unemployment figures are reported on Wednesday and Friday. If the official number revealed Friday shows continued joblosses for the past month of 200,000+, then that's bad news. If the unemployment rate hits 10% (from 9.8% now), that's a newspaper headline effect that will only magnify market frustrations.
(3) A manufacturing index report on Monday should give an interesting read into whether the economic rebound, now that most of the government stimulus to provoke and prop up manufacturing has run its course.
(4) Continue to watch the value of the dollar - which goes up with poor economic news. As the dollar value increases, the markets tank (as a result of people switching from equities to treasuries). While the dollar isn't the envy of any other economy really, it does still have room to increase in value (considering its been drastically devalued over the past 3 months).
Happy Halloween to all - perhaps today's horrible drop was a next week rally in disguise.
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