In my Market Forecast this weekend, I said, "...upside moves could be limited.... If the 30-day MA is broken, SPX could easily come down to test 1170." SPX indeed tested 1170 today and closed just above. Yesterday, we saw the market bounced higher on better economic numbers. Today, the market slumped much lower on renewed worries on Europe. Investors were concerned that besides Greece, Portugal and Spain may also present further problems. The selling was quick and harsh. Most of the drop came within the first 2 hours.
Techs were mostly down. GOOG tumbled more that $24 to trade just above the $500 mark. BIDU fell back below $700. AMZN broke down below $130, off 5.57% on the day. Even the almighty AAPL lost almost 3%!! Coals continued to sink. After reaching a recent height of nearly $100, WLT closed just above $77 today, down another 6.19%! CLF stumbled 7.46% while ANR and BTU fell 5.21% and 4.53%, respectively.
OSTK traded against the market flow, jumping +21.03%, after reporting a profit for its 1st quarter. MA also reported a nice Q1 and initially traded up almost $7. However, it got pulled back by the market current and closed only up $0.51.
The Dow was down 225.06 points; SPX lost 28.66 points; Nasdaq fell 74.49 points:
SOXX (semiconductors) led the techs down, losing 4.53%. XME (metals and mining) slumped another 4.42%. Both USO (oil) and GLD (gold) traded lower. XLF (financials) fell 2.73% while HGX (housing) was down 4.36%. FXI (Chinese ADRs) slipped 3.7%.
SPX has been testing its 30-day MA for a week. Each time, it bounced off from it, until today. As discussed in my Market Forecast, there are simply too many uncertainties right now: problems in Europe, lawsuits against GS, financial reform, oil spill...etc. Now that the market indices have broken below the 30-day MA, the sentiment on the market has turned much more anxious. VIX jumped 18% and went almost to 26 intraday! We could see some intermittent buying tomorrow, but, I think the momentum is on the downside right now. Besides the "uncertainties" mentioned above, on Thursday, we'll get another jobless claims, which may not matter much this time around. Friday's unemployment data should catch investors' attention. A strong report could temporarily stop the bleeding, but, a mild report might just add to the downward momentum.
Disclosure: no positions