All weekend long, the Libyan uprising had been gaining steam and made front page news, especially after the turmoil turned bloody, which spread concerns of this becoming an all-out civil war.
The futures pointed to a lower opening Monday night, and the markets obliged by heading south during yesterday’s session with the S&P; 500 losing over 2%.
The markets were ripe and overdue for some kind of correction so these events were just as good of a reason as any to push some sell buttons. The question remains if this will be an isolated event or the beginning of more downside action.
Chaos and concerns increased as dictator Gadhafi talked about “rivers of blood flowing” while deploying tanks, helicopters and jet fighters to combat protesters.
As is to be expected, oil rallied, as did gold and silver, while interest rates headed lower as investors were looking for safety.
On the earnings front, Wal-Mart and B&N; disappointed, while HP offered lower than expected guidance after the close, which may affect the markets today.
Technically speaking, the S&P;’s 1,316 level, its 20-day moving average, had been closely watched to see if it would hold. Any close below might invite more selling. At the end of trading yesterday, this index ended up at 1,315.
Until the situation in Libya calms down, or a peaceful resolution is found, you can expect more volatility in the world markets.
These events are some of the unknown uncertainties I have been talking about. There is nothing you can do; you need to let the markets dictate your next move. If the break is further to the downside, make sure you know where your sell stops should be and execute them as necessary.