World Bank Forecast Blamed for Yesterday’s Sell-off

Yesterday, I mentioned that the World Bank was forecasting negative global growth. According to much of the financial media, this was the catalyst for the sell-off. Perhaps it may have had an impact, however, the markets were pointing to the need for a pullback for the previous four days. Manulife Financial (MFC.TO, MFC) was a major contributor to the selling on the Canadian markets, along with the pullbacks in oil and gas and the materials sectors. All the market indexes we track have returned to their 50 day moving average and it will be interesting to see if this remains an area of support. The price action yesterday had a significant impact on the market phases, with the sectors shifting back to warning and bearish phases.

In terms of potentially market moving news today, the housing data will be reported later this morning. Also, investors and traders may be waiting to see what the Federal Reserve has to offer on Wednesday.

Futures this morning are positive along with the DAX, indicating a positive open. The market condition scans are showing a negative bias and the market bias indicators are neutral, indicating we remain in a period of random price movement. After the significant sell-off yesterday, it would not be surprising to see a bounce today.

Index	Change	%Change	Level	Phase
TSX	-453.77	-4.41%	9834.18	Warning
DJIA	-200.72	-2.35%	8339.01	Bearish
Nasdaq	-61.28	-3.35%	1766.19	Bullish
SP 500	-28.19	-3.06%	893.04	Bearish
Russell 2000	-19.91	-3.88%	492.81	Warning
NYSE	-209.17	-3.52%	5725.07	Warning

Source: Telechart

Short Term market outlook:

Bias: Scans showing a neutral bias

Energy: weak

Primary Trend: sideways

Sector	Phase
Consumer Staples	Recovery
Healthcare	Recovery
Technology	Bullish
Utilities	Recovery
Energy	Distribution
Financials	Bearish
Industrials	Bearish
Materials	Distribution
Consumer Discretionary	Bearish

Source: Telechart