font-family:Arial’>. For the S&P 500 (SPX), it was the downtrend line; for the Nasdaq 100 (NDX), it was the 200-day moving average.
None of the major indices have turned up from oversold levels, and all have further downside to first support. We believe there is a good chance the SPX will hold up in the 1080 area, above the August lows (see Friday’s Morning Comments). This would be the first step toward recovery for the market.
Citigroup (C, 44.15), which we look to for leadership, fell 6% last weekstyle=’font-size:10.0pt;font-family:Arial’>. The stochastics are getting oversold as C approaches support at the July/August lows. We will look for C to firm up this week, and the market to get oversold and/or establish support, before calling for a recovery rally.
For now, market internals support the downtrendArial’> Source: CQG
Source: CQG
GOLD & DOLLAR UPDATE
Source: CQG
Last week, we saw the Dollar Index (DXY) test support at the bottom of its long-term triangle formation. Consecutive closes below the uptrend line would mark a breakdown and suggest further dollar weakness. Next meaningful support is DXY 87. A breakdown in the dollar would be supportive of upside in gold prices.
style=’font-size:10.0pt;font-family:Arial’>The AMEX Airline Index (XAL) fell below long-term support.
style=’font-size:10.0pt;font-family:Arial’>The Philadelphia Bank index (BKX) fell back into its weekly cloud.
style=’font-size:10.0pt;font-family:Arial’>The Morgan Stanley REIT Index (RMS) broke below first support at the uptrend line.
Our sector table on the following page contains support and resistance levels and performance datastyle=’font-size:10.0pt;font-family:Arial’>. Please note levels in boldface are less than 1% away from Friday’s close.
