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Market Sinks To Test Support

|Includes: AAPL, EBAY, FCX, FFIV, Morgan Stanley (MS), WFC

Yesterday, in my evening article, I said,

"For the past 4 trading sessions, the market has been treading water, which means some consolidation is happening.  Both SPX and Nasdaq are sliding away from the daily upper BB.  This shows a lack of immediate momentum to push the market higher.  Unless the market can jump back up to catch the daily upper BB, the market may just go into a consolidation mode.  The support levels are still SPX 1080 and Nasdaq 2150, as discussed in my Market Forecast this weekend.  As long as these support levels hold, the market's bullish trend should stay intact.  So, no hurry to chase a lot of trades right now, and be little more careful."

This morning, both MS and WFC reported earnings that beat the estimates.  Initially, the market traded higher and the financials bounced.  But, in the last hour of trading, the market took a sharp dive, with the Dow falling more than 100 points from its day high.  MS ended up +4.8%, however, WFC received a downgrade in the afternoon and ended 5.12% lower.  FCX delivered an excellent quarterly report and saw its shares trade over $82/share intraday.  FCX ended the day up +1.39%, just below $80.  AAPL reached an all-time high of +208.71 on the heels of more target hikes.  AAPL shares closed up +3.1%.

After the market, FFIV posted a strong quarter, sending its shares hopping more than +8%!  On the other hand, while beating the estimates, EBAY disappointed investors on its holiday outlook.  EBAY shares fell 4.51% in after-hours trading.

The market ended just above the support levels that I mentioned last night:  SPX 1080 and Nasdaq 2150.  The Dow closed down 92.12 points; SPX dropped 9.66 points; Nasdaq fell 12.74 points:

USO (oil) rose another +2.33%.  GLD (gold) and SLV (silver) were both higher.  XLF (financials) fell 1.91% while HGX (housing) slipped 1.87%.  Commodity Sectors were mostly flat to slightly red.  BTK (biotechs) fell 1.08%.  FXI (Chinese ADRs) slid 0.61%.

SPX

SPX fell 9.66 points to close at 1081.40, just above the 1080 level.  It closed right at its 10-day MA.  The MACD was down.

Nasdaq

Nasdaq dropped 12.74 points to close at 2150.73.  It also closed at its 10-day MA and just held the 2150 support level.  The MACD slid.

Once again, the market tested the 1100 level and failed (the intraday high on SPX was 1101.36).  This market is still not ready to push higher just yet.  It looks like the market is still trying to rest a little more.  In my opinion, the selling in the last hour today was a technical one.  VIX dropped all the way down to test 20, and did a sharp bounce to close just above 22.  We could see VIX test 23 on this bounce.  But, the downtrend on VIX is still intact.  I think when/if it goes below 20, the market will break above SPX 1100.  Like I said last night, be more careful and there's no hurry chasing trades.  I think it's prudent to keep a health cash position until things are clearer.

Good night and HappyTrading! ™