The market continued to break down on Wednesday, and in a big way! The Dow lost another 167 points, the SPX gave up nearly 20, and, Nasdaq dropped more than 40 points, again! This basically takes the market back to where it was nearly 6 months ago, within the Feb-Mar range. We are now having a 10% correction from the July high!
VIX had another huge jump, and it is now above 30!! Most sectors continued to slide. United States Oil Fund LP (NYSEARCA:USO) went up! The iShares FTSE/Xinhua China (NYSEARCA:FXI) was among the hardest hit, following the big drop in the Asian markets.
The Nasdaq is now within the Feb-Mar range (2400-2475). The MACD went so low that it is almost off the 6-month chart!
Similarly, taking the respective Feb.-Mar. range for the SPX, we’d get 1400-1440. But, if things break down fast, as there’s definitely some panic on the market, we may have to look at 1380 for support!
We had further worries from the housing sector as Countrywide Financial Corp. (CFC) dropped almost 13% on bankruptcy fear. Network Appliance Inc. (NASDAQ:NTAP) reported good earnings, and announced $1 billion share buyback. NTAP is up more than +5% in AH. iRobot Corp, (NASDAQ:IRBT) announced that the Pentagon plans to purchase up to 3,000 more robots. IRBT traded up +2.35% during the regular session and continues to rise after the market.
Well, according to a Fed member, St. Louis Federal Reserve Bank President William Poole, there’s no need for an emergency rate cut. In Asia, there’s definitely some panicking going on. When I last checked, Japan was down 600 points, Hong Kong was down some 600 points, and China was down about 100 points!
Again, we’ve been telling people to be patient and keep cash. Let’s not panic and allow the market to find a bottom. With cash in hand, we’ll be able to take advantage of the potential opportunities once the market stabilizes.