A Shock!
The Producer Price Index was a shock this morning, coming in at +1.1 pct, and sending the market sharply lower. The S&Ps were trading at 1321 before PPI, and traded down to 1314. Currently S&Ps are at 1311.
On the down side, we have a key area at 1310; we have big support between 1310 and 1311. Then Wednesday’s low at 1308, 1305.50, 1303 and look out for limit down at 1300.10.
On the way up, we have 1314.50, 1315, 1317, 1320 and 1324. To get out of trouble, this market must get above 1328-1330, which at this point does not look likely today.
NASDAQ is limit down at 2291. The market was hit with a double whammy, first Nortel preannouncing poor earnings for next quarter, and with a bleak outlook.
For today, we have support between 2275 all the way down to 2240. This zone was critical on the way up, and it will be critical on the way down. Double-limit down comes in at 2236. If that fails to hold the target is 2170.
The first level of resistance is 2310 to 2320. If we get above that, 2335-2350. At that point, we’ll be getting close to filling the gap at 2356.
We expect a significantly lower open on Dow, down triple digits. But as long as we stay above 10,600 we like this market.