Wednesday, August 26, 2015

What Now For the Dow Jones Industrial Average?

DJIND-D 8-25-2015

Martin Armstrong
The closing of the Dow at 15666.44 was below support at 15824.73. Additional support lies at 15176.26 and a closing beneath that level will warn of a break down to the 14334 area. We do have four Monthly Bearish Reversals under 15000 with a gap thereafter down to the 13650 area, and the long-term support starting at 12,221. Yearly does not come in until the 10000 level, so we are not talking about a reversal of fortune long-term. We could really break and that sends cash pouring into government bonds beyond anything we would contemplate.
Any paper rated BBB is becoming unsalable. We are starting to see capital even pick up high-rated corporate debt while shunning away from emerging market and local debt. So be on guard for we may be in a real Phase Transition in bonds and to accomplish that we may see really extreme levels in equities on the downside. This may not be 8000 points on the Dow as was the case from 2007 to 2009, but it could be 5000. If this week’s low gives way and we close August BELOW 15555, look out below. We need to wipe out the TV pundits.
We will update you on this development, but keep in mind that a break to new lows opens the pattern to the extreme.

These Stocks Go Up When Markets Crash

Investors are running for cover…
Financial markets around the world have had a meltdown over the last few days.
US stocks are coming off their worst week in four years…
The Euro Stoxx 600, an index that tracks 600 of Europe’s biggest companies, has lost 8% over the last five days...
And in China, the Shanghai Stock Exchange is down 38% since early June.
There’s been almost nowhere to hide from this global sell-off…except in gold.
The price of gold rose 3.8% last week, while US stocks lost 5.8%. (more)


GREEN - Favoured / Buy Zone
YELLOW - Neutral / Hold Zone
RED - Unfavoured / Sell / Avoid Zone

METRO INC. (MRU.TO) TSX - Aug 25, 2015



Braskem SA (NYSE: BAK)

Braskem S.A. produces and sells thermoplastic resins. Its Basic Petrochemicals segment offers olefins, such as ethylene, polymer and chemical grade propylene, butadiene, isoprene, and butene-1; BTX products comprising benzene, toluene, ortho-xylene, para-xylene, and mixed xylenes; fuels, including automotive gasoline and liquefied petroleum gas; intermediates, such as cumene; and other basic petrochemicals, which include ethyl tertiary butyl ether, solvent C9, and pyrolysis C9. The company’s Polyolefins segment produces polyethylene, including LDPE, LLDPE, HDPE, UHMWPE, and EVA; green polyethylene from renewable resources; and polypropylene (PP). Its Vinyls segment produces polyvinyl chloride, caustic soda, chlorine, hydrogen, caustic soda flake, and sodium hypochlorite. The company’s USA and Europe segment produces PP in the United States and Germany. Its Chemical Distribution segment distributes solvents, including aliphatic, aromatic, synthetic, and ecologically friendly solvents; engineering plastics; hydro carbonic solvents and isoparafins; and general-purpose chemicals.
Take a look at the 1-year chart of Braskem (NYSE: BAK) with the added notations:
1-year chart of Braskem (NYSE: BAK)
Unlike most energy related stocks, BAK actually hasn’t hit a new low recently. However, the stock’s trend does look like its peers within the energy sector, which is down. Over the past 5 months BAK has formed a key support level at $6.50, while also forming a trendline of resistance since November. At some point, one of those two lines will have to break.

The Tale of the Tape: BAK has an important level of support at $6.50. A trader could enter a long position at $6.50 with a stop placed under the level, or on a break through the trendline resistance. If the stock were to break below the support a short position could be entered instead.