Looking For The Key
We expect the first key area for S&P futures today will be 1462.50-1463, which was a key point for us yesterday. This morning, S&P futures were trading down 400 at 1465. On the downside, we have a major area at 1459.50, then 1455.50, 1453.50 and 1449.50. On the upside, above 1465, we have 1466.50, 1468, 1472, 1475.50, 1477.50, 1479, a key area at 1481.50, and a major area at 1482.50.
Our suspicions are that, if we are going to see a sustained rally, we have to get above 1466.50 and stay above it. The Morning Pivot for today is 1462 to 1469. Expect some choppy action in between that range before the market makes up its mind.
On the NYSE yesterday, declincers led advancers by a 3:2 margin. Of the 87 sub-indexes in the S&P 500, 66 fell while 21 rose. Of the 500 stocks, 325 fell and 153 gained. Volume was 1.1 billion shares, 71% of which was in declining volume. What that really shows is, if it were not for the tech sector yesterday, it could have been a bloodbath.
NASDAQ was trading down 40 at 3813. Yesterday was the first day in the month that we had two up days in a row in the NASDAQ.
We see support between 3783 and 3770, then 3750 will be a little bit of a pivot area. If we get below 3750, look for yesterday’s low of 3715 to be tested. Support is between 3725 and 3715. Under that, 3660 becomes the next target. Along the way 3688 to 3680 should provide support.
On the upside, we see resistance between 3805 and 3820, then 3850 up to 3875. If we can get above that, the 3900 zone comes into play. Especially important will be 3920. If we climb above 3920, it targets a run to 4000.
The Dow saw a decent recovery off its intraday low yesterday, as the index rallied to close some 120 points above its worst level of the session — but still settled down 101 points on the day. The one good thing to take from this is that we did close above 10,600 in the cash. Expect some sideways movement here, as we have declined six sessions in a row.
The key question is if good news comes out — such as interventon in the euro or some news on crude oil that benefits the market and drives crude oil prices lower — will the Dow post a sharp rally. That could rally the Dow cash up to 10,800.