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As GM goes, so goes the market

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An old market analogy that says "as GM goes, so goes the market" is playing out to a bears liking today as this Dow component and world's largest automaker General Motors (NYSE:GM) $33.91 -5.93% breaks below the $35 level after this morning's comments from Banc of America that it sees flat to slow growth in free cash flow, which could have GM's stock dividend at risk.

While much of today's "news" has been geopolitical, it's starting to take its toll on the major indexes with the Dow Industrials (INDU) 7,760 -1% now lower by 82 points and trading just below its DAILY S1 level.

The move lower and trading of DAILY S1 in the Dow Industrials was quickly followed with similar trading in the S&P 500 (SPX.X) 819 -1.2% and S&P 100 Index (OEX.X) 413.86 -1.12% at their respective DAILY S1s of 821.90 and 414.60. Not long after the SPX and OEX made "confirming" moves a weakness lower, the NASDAQ-100 Index (NDX.X) 959.66 -1.22% traded its DAILY S1, and hovers at that level here.

Sector action that had been broadly negative earlier this morning, that turned broadly green, as once again took on the color of a setting sun in the form of red.

Sector weakness has builds in the HMO Index (HMO.X) 469 -4.01% to take the current top spot in sector weakness. The Gold/Silver Index (XAU.X) 71.91 -3.55% isn't far behind, but currently holds its still trending higher 200-day SMA of 71.80 and 50% retracement of 71.84 (retracement from 07/26/02 relative low to 06/04/02 high).

Sector strength is waning in the Forest Paper Product (FPP.X) 271.84 +1.01% sector, while sector bellwether and Dow component Intl. Paper (NYSE:IP) $35.80 +2.3% looks to challenge a rolling lower 21-day and 50-day SMA near $36.00.

Today's major index declines come once again on light volume with the NYSE and NASDAQ just now breaching the 1 billion share levels.

Market internals are weak with breadth at both the NYSE and NASDAQ seeing decliners outnumber advancers by a 2 to 1 margin.

The list of new 52-week lows has reached a level of 147, and I haven't seen this many new lows since I started keeping daily tabulation since early January. New highs on the NYSE are hard to find with just 26 doing so today. NASDAQ has 91 stocks having traded a new 52-week low compared to 38 stocks trading new highs.

Jeff Bailey

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