Equity correction may be precursor to larger one to come

Good day! The market has struggled this week after taking a large hit over heading into Monday morning. The pace of the selloff has kept the bulls on uneasy ground, leading to continued movement on the downside afterhours on Tuesday. We should expect to continue to see added choppiness in the market as the week progresses since the pace of the selling should slow as the Dow approaches its 100 day moving average.

Dow Jones Industrial Average

While the overall market has fallen, commodities have continued to hold the support levels I wrote about several weeks ago. Recovery action in gold, silver, and oil have all been slow as anticipated, but they all popped slightly on Tuesday with gold and silver breaking out of 30-minute trading channels. Gold settled at $1,523.30, while silver settled at $36.128 on the session. Gold is down 2.13% this month, while silver is still down 25.66%. Crude oil is down 12.59% this month and settled at $99.59 on Tuesday.

There are a lot of things weighing on the market this month that have put pressure on the bulls. Earnings season has wound down for one thing, which often leads to a corrective phase in the markets. Summer is also fast approaching, along with the end of QE2 this June. The European debt situation continues to make headlines. And our own debt limit has those in Washington scrambling for a solution to our home-grown problems. Top this off with rather lack-luster economic data, and little to no real jobs growth, and some would wonder how the market has held on as long as it did.

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