David Chojnacki - Market Technician
Yesterday morning's Futures were signaling an ugly open and equities did not disappoint with a gap down. Selling was heavy and continued through the morning. After some sideways action in the afternoon, a last hour sell-off put the major indices at their lows of the day at the close. The losses were significant. There were many reasons given by the pundits for the action: geopolitical issues, sovereign defaults, lowering of QE, etc,. Simply, a pullback was over-due and all of the reasons mentioned acted as catalysts. We noted recently that we had a string of days with negative breadth and small-caps were breaking down recently. At the close, the DJIA was down 1.88%, the S&P was off 2%, and the Nasdaq100 slipping 2.1%. Breadth was decidedly negative, 9 to 1, on above average volume. RSI's were significantly lower in the session, and the S&P and DJIA are approaching oversold near term. ROC(10)'s declined in the session and the Nasdaq100 and S&P moved back into negative territory. MACD's remain below signal for all three major indices. The DJIA closed below its 50D-SMA(16877) and developed a large bear candle. It is now negative for the year. The Nasdaq100 moved below its 20D-SMA(3929) and closed below 3900. The S&P closed below its 50D-SMA(1953) and dropped below several support levels. Next important support is 1920-25 and 1900. The VIX spiked higher by 27% to finish at 16.95. Near term support for the S&P is now at 1920-25 and 1912. Near term upside resistance is now at 1950 and 1962. The Nasdaq100 near term support is now at 3888 and 3875. Near term upside resistance is now at 3900 and 3912. Significant sell-off in Europe in early trade. We get Employment Report today and other key economic numbers(see above). Futures pointing lower as we expect to see more selling.
Major Economic Reports Today
Employment Report-8:30am Personal Spending-8:30am Mich Sentiment-9:55am ISM Index-10:00am Construction Spending-10:00am Auto/Truck Sales-2:00pm
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