David Chojnacki S1F Market Technician
An ugly open lead to a morning of falling prices. Once again, the Market found a bottom in the late AM and a steady buy program was initiated into the close. The indices finished down, but comfortably off their lows. At the close, the DJIA was down 0.59%, the S&P off 0.43%, and the Nasdaq100 losing 0.36%. Breadth was negative, 1.5 to 1, on below average volume. Near and short term technicals have weakened significantly in the last four sessions. RSI's are in the low 40's for the S&P and DJIA, with the Nasdaq100 dropping to 39. ROC(10's) have become negative and are declining for all three major indices. Other short term technical indicators(e.g. moving averages, MACD's) continue weak. Yesterday's intra-day low in the S&P at 1347.95, was a 5% correction from the recent April high. The Nasdaq100 at the close was off 5.5% from the recent high. All three major indices developed a 'hammer' in yesterday's session, which can preclude a bottom. We would need to hold yesterday's lows in today's session, for further confirmation of a reversal. The S&P does have further support below yesterday's low of 1347.95 at 1340. This is interim chart support and not very formidable. Should the decline continue, look for more important support at the 38% Fibonacci retracement level of the third leg at 1320. A similar correction in the Nasdaq100 would put support at 2542. We did find support at technical levels yesterday, indicating that the selling was orderly, but not capitulating. The VIX moved above the 20 handle intra-day, but settled at 19.05, up just 0.5% for the session. Early Futures are indicating a moderately lower open.
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