We saw the market begin to falter early in the week with several days of unusually heavy selling and this had investor’s nerves on edge, but today’s drop was devastating for many portfolios caught by surprise. Meanwhile China continues to foolishly try to micromanage their wildly gyrating stock market rather than let the market float and find its own level. Looks like China’s financial woes have finally hit the US markets. Now couple that bombshell to ongoing economic implosion in Greece, the saber rattling by North Korea’s Kim Jong Un and it was the making of a perfect storm for a sell-off and brother did it sell!
The market was recently trading at 18312.39 (5/19/15) and now it’s dropped to 16459.75. We haven’t seen a sell off like this since Aug. of 2011. The severity of todays rout suggests there’s more to come on Monday.
Trading broke through resistance at 17K with conviction. The stop price considered by many traders is 16310, and should the market break through that level on Monday it could trigger another selling frenzy as investors flee the market. We’re only 150 pts away from that dreaded trigger and after today’s over 500 pt drop it wouldn’t take much to reach this arbitrary stop loss number.
The oil industry is one of the worst sectors and it continues to be battered unmercifully. Chevron, Exon, etc., all nose diving. Chevron has gone from $134 a share a year ago to $75 a share today. Given their rapid decent, oil stocks should be called Hindenburg stocks.
The E-T-F OIL (fund) recently saw $24 a share and at the time it was thought to be a fairly safe play as a sector fund, but it’s now trading at $7.50 per share with no relief in sight. This is ugly for any stock, but an ETF? This is scary and the falling share price represent billions of dollars lost. Another example is a premier oil drilling company, Transocean (RIG). RIG has lost about 70% of its value in the last 11 months and this is unfortunately not unusual among off shore drillers!
Watch the action on Monday… hope you are invested wisely!