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Bears Reclaim 20-Day MA's

Bears Reclaim 20-day MA's

9:00am (EST)

The bears are following last week's pattern but the bulls need a relief rally today instead of a Friday after the bears pushed the 20-day Moving Averages (NYSE:MA) - and the 50-day MA on the small-caps.

The Dow declined 129 points, or 0.8%, to close at 15,843. The blue-chips tried to get back above 16,000 on the open but stalled at 15,997 before testing a low of 15,827 late in the session. Support an 15,800 held once again but if broken could lead to 15,600. Nike (NKE, $76.94, down $2.38) was the biggest blue-chip to weigh on the index after falling 3% and accounting for 15 points to the red. The company announces earnings next Thursday and yesterday's pullback may have been a gift. The Dow's 20-day MA is at 15,970 - its 50-day MA is at 15,627 and we have said 15,600 could get tested on a close below 15,800.

The S&P 500 sank 20 points, or 1.1%, to finish at 1,782. The index made a third of a point gain on the open but spent the rest of the day drifting lower. The bottom checked-in at 1,780 and support held at 1,775 but there is risk to 1,750 on continued weakness. The 20-day MA is at 1,796 and the 50-day MA is at 1,758.

The Nasdaq fell 56 points, or 1.4%, to end at 4,003. Tech made a 5-point hike to 4,065 on the opening bell before falling below the 4,000 level for the first time since late November to 3,998. Support held into the close but there is further risk down to 3,950-3,900 depending on volatility. The 20-day MA is at 4,007 while the 50-day MA is at 3,923.

The Russell 2000 dropped 18 points, or 1.6%, to settle at 1,101.50. The small-caps touched 1,020 at the start of trading but faded to a low of 1,099 into the close before holding 1,100. The dip below 1,100 gets 1,075 in play if the bulls can't reclaim 1,110 today. The 20-day MA is at 1,120 for the Russell with the 50-day MA at 1,104. The 100-day MA is at 1,076.

The S&P 500 Volatility Index ($15.42, up 1.51) zoomed 11% and made a solid close above 15 unlike last week. We mentioned any closes above 15 could get 17.50 in play and yesterday's high was 15.43. The VIX reached 15.71 last Wednesday and closed at 15.08 last Thursday but we said to stay bullish. This time we are urging caution after flinching. Although we do expect a run to new highs to return, we said this week (and next) could be rough and so far that hand has played out like spades.

We got some good news after the close on Wednesday as Vera Bradley (VRA, $22.76, down $0.72) shares fell 11% in after-hours. The company beat their lowered guidance from last quarter but warned again on profits and revenue slipping next year.

As we head to press, futures look like this: Dow (-22), S&P 500 (-2); Nasdaq 100 (-2).

We could have action again to take this morning on another earnings trade so please pay careful attention to our trading instructions this morning as we want everyone to get the best fill prices on a trade that could book us well over a 100% profit. We have also added a couple of new ideas to our Watch List. Subscribers, check the Members Area for the updates and get ready to rock-and-roll this morning!