David Chojnacki S1F Market Technician
The Market was signaling weakness in the first half hour yesterday, and after falling slightly seemed to hold on to critical support. After the FOMC minutes, some hint that maybe easing may be ending before people expected, sent the markets moving to the downside. By the final bell critical support was broken and moderate losses were racked up across the board. At the close, the DJIA lost 0.77%, the S&P gave up 1.2%, and the Nasdaq100 slipped 1.5%. Breadth was decidedly negative, 3.1 to 1, on just above average volume. RSI's dropped among all the major averages and ROC(10's) declined into negative territory. The prior session's move through 1525 on the S&P was somewhat suspect on the weak volume and a near term consolidation had been expected. The S&P did hold its 20D-SMA(1510) and closed right near secondary support of 1512. The DJIA and Nasdaq100 were weaker, in that they closed below their 20D-SMA's. All three major indices developed an 'engulfing bear' candle, which took out a few prior sessions. Today's session will be key, to see if we get a follow through and any indication that this is a more serious pullback. Key numbers to watch will be 1494 in the S&P and 2725 in the Nadsaq100. The S&P could not hold the 1525 level, which was a sign that some pullback was in the offing. It closed a point below support at 1512. If it can't back above that at today's open we would expect it to head towards 1494, where there is fairly good support. Upside resistance will be 1525 and 1540. A break below 1494 and we will be headed for 1475. The VIX spiked 19.2% to close at 14.68. Keep an eye on this today. Tons of economic data today to move the markets. Europe and Futures lower early this morning.
Major Economic Reports Today
Initial/Continuing Claims-8:30am CPI-8:30am Existing Home Sales-10:00am Phila Fed 10:00am Leading Indicators-10:00am NatGas-10:30am Crude Inv.-11:00am
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