Commodities prices fall, still no stock market boost
Commodities prices tumbled today which is generally received as a very good economic indicator especially when the word recession gets thrown around. Corn prices touched $8 a bushel briefly but are back down to modestly to $7.46 after falling the daily limit. Fears of a rainy summer and minimal crop have disappeared, now it looks like this years crop might be near normal levels.
Oil prices also dropped more than $5. This should spark a stock market rally especially considering how heavily the price of oil has affected the stock market. A drop this large, a few percentage points, should give another reason to rally. Instead we were met today with another sell off. Tribute to the bear market that is unfolding right before our eyes.
Further surprising is the chart of all the major indexes. Both the Dow Jones industrials and the S&P500 were sitting on trends that looked very strong, the SP500 bucked its trend and has dropped 7 points below. The amount of momentum through the support line even shows a large gap in the S&P500 as it slammed through the 1250 line. This support line is very important, hopefully something catches this before a full on bear market ensues. The next support for the S&P500 isn’t until 1216, that’s about 3% away from another support line and hopefully a bounce. Resistance is heavy at 1275, that’s where the market was crippled today after a touch to that level.
The best thing that could happen for the market is a gradual decline in commodities. Nothing crazy overnight, that kind of action worries people. But a common, slow downhill decline will do nothing but good for the next few weeks. Lower commodity prices are good for everyone excluding just a few industries.
