Tuesday October 23 20128:00 AM CST
We have spent the last month and a week warning of the danger of being long this market. Now that reality is happening. Yesterday we noted apparent tops in MCD and CAT. Today duPont Chemical announces a lower forecast and will shed jobs. This is another classic industrial stock broadcasting weakness to come in the world economy. Notice duPont made a mere one cent a share, in other words duPont is opearting world wide at break even.
Earnings go flat at economic bellweather 3M.
The Dow has continued to drop in pre market trade now at 7:50 AM CST down 149 points. This could be an ugly day. We hope you have taken defensive action as we have outlined.
The internal indicators have been trending sideways in no investor land, not offering neither a great low risk entry. October continues to live up to its ugly reputation.
This weekend we pointed to the declining energy prices as evidence of a declining economy. Oil topped last in 2008. It may well have topped first in 2012.The XES energy service ETF turned down the last few days.
XES and Crude Oil
Crude oil is the solid black line, now XES and Crude are both falling. XES managed a bounce in October but has fallen back below the 200 bar Moving Average. This is not a positive sign. Weak oil prices meana weak economy, period, don't let the talking heads on business cable tv fool you on that one.