The Market opened to the downside, and accelerated in that direction as the session wore on. When the Market closed, the DJIA was down 2.6%, the S&P500 down 3.1%, and the Nasdaq100 off 2.9%. Volume picked up as the selling increased. The Nasdaq100 and S&P500 closed below some important support at 1742 and 1070 respectively. Expect further weakness. They are both now within reach of their 200D-EMA( which is 1674 and 1046). The Nasdaq100 is now 8.6% off its recent high. The DJIA held 10000, but more important support is at 9925. We remain below 20 and 50D-EMA in all three indices. The Financials (XLF), closed down 4.3% to 13.78, breaking some important support. Next session critical to get back above 13.82 level or we may test 13.00. Support at 13.75, 13.60, 13.25 and 13.00. Resistance now at 14.00, 14.15, 14.30 and 14.40. GOLD(GLD) tumbled 3.9% to close at 104.37. It closed just below important support at 104.50-106 area. Next session is critical to recovering this level, or we see further erosion to 100 level. The VIX jumped up 20.7% to 26.08.
Trading Trend
Long term, we remain in a correction, below ten month trading channel and 50% retracement levels in the DJIA and S&P500. Short term, bias remains to the downside. Near term, we broke through some critical support last session and further weakness can be expected. Earning’s season continues this week.Today’s futures(at 8:15am) are slightly lower versus fair value. The open will probably be influenced by the employment report. Economic growth indicators and U.S. Treasury funding have become the new key Market movers.
Major Economic Reports Today:
Employment Report-8:30am Consumer Credit-3:00pm
MAJOR INDICES- Short term support and resistance levels.
DJIA-(close 10002) SP500-(close 1063) N-100-(close 1732)
S R S R S R
10000 10150 1050 1070 1730 1735
9925 10200 1046 1080 1720 1742
9850 10222 1044 1085 1700 1758
9803 10314 1035 1093 1692 1765
9765 10327 1025 1100 1674 1775
9725 10355 1104 1783
10500 1105 1800
10540 1115 1807
Options/Derivative Flows
"In EEM (iShares MSCI Emerging Markets) size buyers of March 41 / 44 call spreads have been present this week, implying bullish sentiment. In the past few sessions prior to Thursday, EEM had rallied over 3% from a multi-month low touched last week. Thursday's action took the ETF down to new multi-month lows. In XLK (SPDR Technology Sector), we have seen steady buying of longer dated January 20 (2011) puts, which is likely protection against long equity positions in the sector." "With the market closing at the lowest levels since early November of last year, the VIX (CBOE Volatility Index)
rallied sharply through the $26 level. Interestingly, investors bought more options in individual broad based ETFs than index options in the VIX itself. Over 3 million index ETF puts traded and 1.9 million calls yesterday, demonstrating what seems to be a preference of investors to buy ETF options over index options in the VIX for hedging and or speculative reasons."
rallied sharply through the $26 level. Interestingly, investors bought more options in individual broad based ETFs than index options in the VIX itself. Over 3 million index ETF puts traded and 1.9 million calls yesterday, demonstrating what seems to be a preference of investors to buy ETF options over index options in the VIX for hedging and or speculative reasons."
Trade Ideas
FAZ(Financials Bear-3X)- Closed up 11.7% to 21.34. Support at 19.00-19.10. Some resistance at 21.40 and 23.00.
GLD- Closed at 104.37. Closed just under important support near 104.50.
QID(Proshares Q’s ultra short)-Closed up 5.7% to 21.63. Support at 20.40 and 20.10. Resistance 21.20 and 22.00-22.25.
Disclosure: None
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