The Dow retreated 100 points today to a bad start to Christmas week.
Fundamentals
Investors sold off today as a wave of pessimism swept across global markets from Asia on uncertainty surrounding the death of North Korean leader. Uncertainties surrounding the stability of the region under the regime of the new young leader caused investors to take to bonds once again. Bond yields declined across the board to recent lows but strangely, options traders seem to be more optimistic today despite the drop, taking total equities put call ratio below par in favor of call options. However, one day of optimistic options trading doesn't mean anything. We can expect the rest of the week to be a low volume, unenthusiastic one ahead of the Christmas holiday.
Technicals
The Dow made a decisive and dangerous drop below the 30MA and 12,000 support zone today which completed an intermediate term head and shoulders formation. Such a formation puts the odds to downside with immediate support at about 11,600 points. Failing which, we could expect some new lows with intermediate neutral trend turning bearish. Santa Claus really seems to be absent this year...
For now, the Dow turns a short term bear trend within an intermediate neutral trend and primary bull trend.
