SPDR S&P 500 (SPY)

[RAVINASA]

Foot/Gleno:

Just got this.

regards.


Today could be an interesting day ... There in a rumor in New York city this morning that Standard & Poor's is going to down grade all the CDOs (Collateralized Debt Obligations) today.

The implications of this is ... that banks and financial stocks will be under duress. This affects the rest of the market, especially since the S&P 500 which has a bank/financial stock weighting of 20%.

Bad news this morning, added to the financial sector weakness. The two largest U.S. banks were downgraded by equity analysts. At 10:02 AM, Citigroup dropped to its lowest level in 4.5 years. All these problems should increase the credit crunch, which would affect consumers down the road. Bernanke's interest rate cut yesterday was an important band-aid, but not a fix.

Since the banking sector is under duress, we are posting its 5 year chart this morning The chart shows the clear 5 year up trend that the Banking index enjoyed ... until its long term support was broken on July 24th. of this year.

After that, the Banking Index struggled for weeks in a consolidation, trying to make it back above its resistance. It was unable to, and on October 16th., it broke another support line to the downside.

The Banking Index is clearly in a correction, and it will offer no upward support on the S&P 500 until its correction ends.


Please click this link for today's update and chart(s):
http://www.stocktiming.com/Thursday-DailyMarketUpdate.htm
(If you are having trouble with the link, copy and paste it in your browser.)