David Chojnacki S1F Market Technician
The Market followed through on the prior session’s weakness and gapped down significantly at the open. After the first half hour, selling slowed, but continued steadily into the close. The major indices were down between 3.1 and 3.5% on the day. Breadth was decidedly negative, nearly 7 to 1, with a pickup in volume. Near term technicals once again deteriorated rapidly with the RSI’s in the upper 30’s for the DJIA and S&P, and the ROC(10) negative and declining. The MACD is also beginning to cross below signal, and we are below the widely watched moving averages. For the Nasdaq100, the RSI is at 45 and ROC(10) is positive but declining. It also broke through and closed below its 20 and 50D-SMA’s. The one positive in yesterday’s session is we closed off our lows
and above the bottom of the recent trading range. For the DJIA, the bottom of that range is at 10719 and 1120 for the S&P. We mentioned in yesterday’s write-up that a break through these levels could see the S&P want to move down to the 1025 area. Back in the beginning of August we bounced off 1101 intra-day in the S&P, so we will want to watch that level to see if there really is support there. There may be some interim support at 1100, but I’m not confident it would hold. Should we hold within the recent trading range(1120-1220-S&P), we may have another opportunity to trade it to the upside. Futures this morning suggest a weak opening, and a continuation of the downside move. The VIX added 10.8% to close at 41.3, an extremely high level.
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