Commodity Selloff Continues

Stocks fell around the globe Tuesday as investors sold shares of energy and mining companies amid a deepening commodities rout.

The Dow lost 163 points, or 0.9%, to 17568. The Dow fell as much as 245 points earlier. The S&P lost 0.7% and the Nasdaq slipped 0.1%.

Of the four major indexes, the S&P is the most oversold technically.  I noticed the SPX is showing a relative strength reading of 30.  Normally I will start laying in longs ( toes wet) at this reading. In a perfect world I like the low to mid 20’s on an RSI reading.

Most of your energy names reside in the S&P and they have been getting hammered, so that’s probably why the S&P has a lower reading than the others. Problem is, if energy goes lower, so will this reading, so I’m not taking the bait yet.

Oil prices and commodities are driving the broader market right now.  FCX fell 6.8% and Kinder Morgan (KMI) dropped another 4% today.

On the mining side, Anglo American slumped 12%, and Rio Tinto dropped 8.4%.  These things are a mess.  Anglo’s dividend suspension drove much of its stock decline today, I expect to see more of this from other companies.  Trade them only for now if you must.

As I said in last nights post, funds are selling their losers and they have three weeks to continue to do so, so stay away. You may not see a meaningful bottoms in these stocks and sectors until early next year.

I added SMN long today.

See you tomorrow.

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