Market Direction Pummeled By Draghi – Next Up Employment Numbers

Market Direction today at one point saw the Dow Jones up 100 points as investors expected to see ECB President Mario Draghi act decisively to protect the Euro following his announcement last week of his “serious” intentions to act. Instead the market got another political mish mash of words and no action. No matter what the talking heads said about this statement being Draghi’s “strongest to date”, the truth of the matter is that the ECB will act probably when it is almost too late. As he spoke the Euro lost ground, European Markets pulled back and the Dow fell 190 points from its high. It was typical political grand standing that continues to confound investors with the lack of any kind of concrete action to finally try to tackle the European crisis.

Clear Signal The ECB Cannot Act

It was also a clear signal that the ECB president has little clout and even less ability to accomplish much without the German and French leaders involvement. Bonds yields soared in Spain beyond the 7% mark and rose to 6.45% in Italy. Personally I cannot imagine having any capital tied to any of these European countries, let along holding Euros. I still believe that at some point it will be Finland who will leave the Euro first, but that’s just a guess on my part as Finland has a very strong economy that can easily go it alone.

Market Direction For Aug 2 2012

The Dow Jones Chart for today shows the wild market direction ride investors took as Draghi took the wind out of the early rally.

Market Direction Chart

The Dow Jones had a wild day as this market direction chart shows.

Market Timing Indicators

Today’s market timing indicators are continuing to reflect a more bearish stance in market direction. Momentum today turned negative.

MACD surprisingly is holding up but continues to decline.

The Ultimate Oscillator is still positive but falling and will soon become bearish.

Rate of change is neutral.

The Slow Stochastic is bearish while the fast stochastic is very bearish for tomorrow. None of the technical indicators are showing signs of being oversold. However 4 down days could be building up some momentum to bounce depending on the jobs numbers on Friday.

Market Timing Indicators for Aug 2 2012

Market Timing Indicators for August 2 2012

Market Direction and the Jobs Numbers

Tomorrow will be all about the jobs numbers, but the market timing indicators are turning bearish with 3 downright bearish and the other three falling lower. If the jobs numbers are better than expected the market direction might rally a bit but right now sentiment has turned decidedly negative and I believe the general market direction trend even if there is a rally, will be lower in the short-term.