Big Volume Day

Yesterday saw a huge spike up in volume in the S&Ps, with some 137,000 contracts traded. Also, we had the second-highest volume ever on the NASDAQ and NYSE.

S&Ps are up 625 points at 1327. On the upside, we have 1329.50, 1333, which was yesterday’s high and Wednesday’s low, and 1334.50, then a key at 1338.50, a major at 1341.50, and 1345.

On the downside, we have 1325.50 and then 1321, which was an important level yesterday that, once breached, started the market on a spiral down. Also on the down side, we have a small area at 1315.50, 1312, 1310.50, a key area at 1307.50, 1303, and then 1298.50.

The NASDAQ was trading up 40 handles at 2570. We have support today between 2550 and 2525. Under that, we have 2490 to 2475. If the market trades below this zone, look for it to take out yesterday’s low at 2436 on its way to support around 2425.

Resistance is between 2610 to 2625. Above this, we see 2645-2655. If the market can get above this zone, look for a move to 2720, and we have resistance between 2715 and 2725.

The key thing to note is, on the Composite Index, we retraced more than 50% from our highs yesterday. In addition, the market settled at its lowest level since August 1999. Finally, we are extended over 31% from our 200-day moving average. It has shattered the previous records for extensions.

The Dow made a nice comeback after being down about 350 at one point yesterday. We continue to think that the Dow will maintain and stay within a range, paticularly in light of its bounce yesterday afternoon.