Did Somebody Say
A key question to ponder: Was yesterday’s action capitulation? Yesterday on the NYSE, declining issues numbered 2,227; advancers 672. That is massive.
Of the 87 sub-indexes in the S&P 500, 73 fell and 14 rose. Of the 500 stocks, 375 fell and 113 rose. On top of that, 74% of yesterday’s 962 million shares were on the declining side.
All told, for the market to only lose 1.5% in the cash, it held up pretty well.
This morning, S&Ps were trading up 500 at 1472.30, right at one of our key areas. On the upside we have 1473 and 1476.50, where we need to get above and stay above to get out of immediate trouble. Then, we have 1478.50, a key area at 1480.50, and a major at 1482.50.
On the downside, we see 1469.50, 1467.50, a key area at 1464, yesterday’s low of 1462, 1459.50, and a key at 1456.50. The Morning Pivot is 1467 to 1469.50.
The NASDAQ was trading up 3000 at 3687.50. After we made the early morning high at 3785 yesterday, it was a brisk sell-off to 3600. However, the market was able to find support and consistantly hold the 3620-level in the afternoon.
Because of that, we’ll start with support today: We see crucial support between 3630 and 3620. If they fall below that, look for 3600 to be exceeded, which targets a run to the August low of 3476. Along the way, 3572 to 3551 will be support, then 3525 to 3518.
On the upside, we have resistance between 3688 and 3705. Above that, we see 3739. If we exceed that level, we are targeting a run back toward the 3785 level. Any settlement above there bodes well for the rest of the week.
Keep in mind that the pattern that we’ve been seeing during this sell-off is for highs to be made in the first hour of trading. It has paid to sell rallies. However, we have declined rather viciously from our recent highs, and at some point we see a “dead-cat bounce” coming into play.
As for the Dow, it continues its struggling ways and has now reached a serious confidence crisis by the bulls. In the short term, however, we have sold off nearly 600 Dow points in less than two weeks. We would expect some kind of technical rally in the near term.
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