Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Dow and S&P Support Hold Up

|Includes: COP, EXC, FE, GPC, The Gap, Inc. (GPS), HPT, KMB, LLY, NLY, RRD, VZ, WELL, WIN

The market continued it's Summer time blues, sinking heavily after existing home sales contracted by more than 27%, worse than economists expected.

At their worst level, the Dow was off more than 180 points, and the S&P fell by more than 20 points. After the sharp morning sell-off, the markets rallied after key support levels held.

The Dow managed to hold the 10,000 level at the close, and the S&P managed to hold 1,050. A close below these levels will likely result in further selling to Dow 9,800 and S&P 1,042.

I am recommending caution for the next 4 - 6 weeks. Use excessive selling in quality tech, retail and high yield stocks to make short-term trading profits. I recommend looking for entry points in (NYSE:GPS), (NASDAQ:WIN), (NYSE:KMB), (NYSE:GPC), (NYSE:COP), (NYSE:VZ), (NASDAQ:RRD), (NYSE:NLY), (HCN), (NYSE:EXC), (NYSE:FE), (NYSE:LLY) and (NYSE:HPT).

Closes below Dow 9,800 and S&P 1,042 likely set us up for new lows for the year. Use this weakness in September and early October to set up for a post-midterm election rally.

Disclosure: Long: GPC, COP, VZ, NLY, HCN, EXC, FE, LLY and HPT