Disappearing Dow 2018 Gains - DJIA Evening Summary 12-7-2018
A Tough Pearl Harbor Day for the Stock Market
It was a rough day on the Dow as stocks got hammered, falling back to a loss for the year, on the anniversary of the bombing of Pearl Harbor.
The Dow Jones Industrial Average fell 2.24% and is down 1.34% year-to-date. The S&P 500 fell 2.33%, while the Nasdaq Composite fell 3.05%.
Pick Whatever Reason for the Drop You Like
Any number of culprits are being blamed for the stock market's reversal of fortune:
- Potential US-China trade war
- Interest rate inversion
- Decreasing job growth
- Wage growth falling short of forecasts
- Recession fears
Big Picture
But, when push comes to shove, the DJIA has been sitting near a top for a while now. The big picture on the Dow is that it has been within a long-term range stretching from 10,240 to 28,672. This range is divided into the following 9 levels:
- 10,240 to 12,288
- 12,288 to 14,336
- 14,336 to 16,384
- 16,384 to 18,432
- 18,432 to 20,480
- 20,480 to 22,258
- 22,258 to 24,576
- 24,576 to 26,624
- 26,624 to 28,672
Some Levels to Watch
The DJIA's close of 24,388.95 puts it below 24,576 which marks the line between the 8th level of 24,576 to 26,624 and the 7th level of 22,258 to 24,576. 24,576 has not been an overly strong level of support and resistance so far. Whether or not that changes remains to be seen.
On the monthly level 25,0888 is still the number to watch currently. A close on the month below that would provide a bearish tone to this market and open up the possibility to a further decline.
Pychological Support
Psychological support still remains around the 24,000 level. For most of 2018 the Dow has managed to stay above the 24,000 level. Periods under 24,000 have been relatively brief. So, if the DJIA continues to decline during the course of December, the 24,000 level will be the psychological line in the sand that will either support the market or will break its back.
Reversal of Fortune
Should the Dow make a comeback then the following levels would come into play:
- 24,064
- 24,576 (the line between the 7th and 8th levels)
- 24,832
- 25,088 (the number to watch for the monthly close)
Conclusion
You can pick or choose or mix and match whatever reasons you like for the current decline in the DJIA. However, the levels outlined previously pointed to the area above 26,624 as one where resistance would likely stiffen. At this point it would seem to require some new input of energy, information, excitement and perhaps a return to the US role as a safe harbor for investing in light of events in Europe and abroad to provide the catalyst and launch the next leg higher of the market. At this point there isn't much that can be definitively be said about the market, but each move lower puts a monthly close above 25,088 a little further out of reach.