A Crucial Day…
Today should be a crucial day in the stock index futures.
S&P futures were trading up 400 at 1351.50.
On the way up, we see 1352.50, 1354, 1358, 1360, 1361.50, 1365, and for this market to get out of trouble, it must get above 1366.50. Above this level, we have 1369, which is a major objective.
We settled Friday at 1370.50 and our high on Monday was 1365, so we have a 550-point gap. On the downside, 1350 is a critical area, then 1347, a key area at 1344.50, a major at 1339.50, and 1336.50, which is also critical. A lot of yesterday’s tick action happened between 1351 and 1352.
As for the NASDAQ, what can you say about a market that on the Composite closed at a 13-month low yesterday? Stunning. In addition, the NASDAQ futures made a contract-low settlement at 2814.50.
Today we are trading up 40 at 2854.50. This market continues to find new excuses to sell off. Yesterday, it was the networking stocks. Bear in mind, most of them were trading 50% off their recent highs.
Sentiment is beyond bearish. Normally when it gets this bearish, you begin to see bottoms forming. But this may take several weeks.
For today, we have support at 2815 to 2790, which was yesterday’s low. If the market gets below that, look for a move to 2750. Along the way, 2760-2745 is support. If we get under that level of support, expect a move to limit down, which comes in at 2719.50.
We do expect that area to hold and contain any further downside movement. If it does not, 2650 is the next target.
Resistance is from 2880 to 2895. Above that, look for 2925. We have some resistance at 2920-2930. Above 2925, look for a possible attempt at 3000. Along the way, 2960-2975 is resistance.
The key today is going to be found in two stocks:
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SUNW |
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JDSU |
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PowerRating). JDSU’s close below $65 is a negative. Critical area will be $62. SUNW has critical support around $78. If it fails there, expect dramatic weakness in the index. These two stocks are the proxies. If they can bounce over the next couple of sessions, it should lead the market out of its troubles — at least in time for the holiday season.
As for the Dow, a rather negative close below 10,500 yesterday. If we were to settle below 10,400, it does not bode well and targets a move to 10,100.