David Chojnacki S1F Market Technician
The Market continued the prior day's sell-off gapping down over 1% at the open. The U.S. market followed the overnight losses overseas and built on the selling during the session. While it appeared to be an orderly sell-off, breadth was extremely negative, as the major averages lost over 2%. By the final bell the averages were just off their lows of the day. At the close, the DJIA and Nasdaq100 fell 2.3%, and the S&P lost 2.5%. Breadth was extremely negative, and there were not many advancing issues. Breadth was 12.6 to 1 on the negative side. RSI's continued their fall to just near or below 40. ROC(10)'s declined into negative territory. All three major averages fell below their 50D-SMA's, which had previously provided formidable short term support and closed below the recent trading range. MACD's remain below signal. With the indices out of the recent range, the bias is for more short term weakness. After two big down days, a near term bounce is not out of the question. We will watch the bottom of the range, 1597 for the S&P, and see if we can recover those levels. The VIX had a monster increase, rising 23% to 20.49. The GLD(Gold) had a big drop, while the dollar(NYSEARCA:UUP) continued to advance. Bias is to the downside for the S&P below 1597, and we would anticipate testing 1540-1548 levels, if we don't get a quick recovery. Near term support is 1575 and 1562. Upside resistance is at 1597-1600 and 1612. The Nasdaq100 continues downside bias below 2916. Near term support is at 2888 and 2875. Upside resistance sets up as 2900 and 2916. Markets overseas recovered somewhat over-night. We have options expiration today and futures are pointing to a moderate upside open.
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