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

Risk Aversion Sparks Stock Implosion

|Includes: DIA, DUG, GLD, iShares 20+ Year Treasury Bond ETF (TLT)
Stocks fell like a Thousand Points of Light then recovered 650 points with the type of volatility of March 2000 when the NASDAQ crashed from above 5,000. This is the type of volatility to track as the Dow heads towards 8,500. I covered the risk aversion aspects on Thursday, but given the market swings the weekly charts are worth a second look.
 
10-Year Note – Semiannual, monthly, weekly and semiannual supports are 3.675, 3.735, 3.853 and 4.250 with quarterly and daily pivots at 3.467 and 3.404, and Thursday’s low yield at 3.226. This is clearly a case of risk aversion.     
 
Courtesy of Thomson / Reuters
 
Comex Gold – Weekly, semiannual, annual, quarterly and annual supports are $1146.9, $1139.7, $1115.2, $1052.8 and $938.7 with my semiannual pivot at $1186.5, and daily and monthly resistances at $1208.1, $1217.3 and $1270.1. Gold above $1200 is a clear sign that the precious metal has become the “currency of last resort”.
 
Courtesy of Thomson / Reuters
 
Nymex Crude Oil Quarterly support is $58.41 with annual and daily pivots at $77.05 and $79.84, and weekly and monthly resistances at $85.32 and $88.53. Note a potential weekly key reversal, and that oil traded below its 200-week simple moving average at $76.82 on Thursday. I have not seen any relief at the gas pump yet.
 
 
Courtesy of Thomson / Reuters
 
The Euro – Quarterly support is 1.2450 with a daily pivot at 1.2636, and weekly, monthly and quarterly resistances at 1.3324, 1.3773, 1.4081, 1.4145 and 1.4478. This is a sign of Euroland contagion, which like subprime will spread to the global economy. The Emerging Markets Fund (NYSEARCA:EEM) is down 8.5% year to date with the China 25 Fund (NYSEARCA:FXI) down 10.7%.
 
Courtesy of Thomson / Reuters
 
The Major Equity Averages
 
Market
6-May
YTD
31-Dec
Cycle
Cycle
Date of
% High
% Off
% Off
Price
Gains
Price
Lows
Highs
Highs
To Lows
Lows
Highs
The Dow
10,520.00
0.9%
10,428.00
6,469.95
14,198.10
Oct-07
-54.4%
62.6%
25.9%
S&P 500
1,128.20
1.2%
1,115.10
666.92
1,576.06
Oct-07
-57.7%
69.2%
28.4%
Nasdaq
2,320.00
2.2%
2,269.00
1,265.52
2,861.51
Oct-07
-55.8%
83.3%
18.9%
Utilities
372.04
-6.5%
398.01
288.66
555.71
Jan-08
-48.1%
28.9%
33.1%
Transports
4,412.00
7.6%
4,100.00
2,134.21
5,536.57
May-08
-61.5%
106.7%
20.3%
Russell 2000
672.23
7.5%
625.39
342.59
862.00
Jul-07
-60.3%
96.2%
22.0%
Semis (SOX)
352.54
-2.0%
359.91
167.55
549.39
Jul-07
-69.5%
110.4%
35.8%
 
Dow Thursday’s low was 9,869.62 with quarterly support at 7,490, annual and daily pivots at 10,379 and 10,617, and annual, monthly, weekly and semiannual resistances at 11,235, 11,296 and 11,442.
 
S&P 500 Thursday’s low was 1065.79 with annual support at 1014.2, a daily pivot at 1136.1, annual and semiannual pivots at 1179.0 and 1194.6, and monthly and weekly resistances at 1207.2 and 1223.9. Quarterly support is 805.4 with semiannual resistance at 1281.1.
 
NASDAQ Thursday’s low was 2185.75 with annual and quarterly pivots at 2258 and 2250, and semiannual, monthly and weekly resistances at 2392, 2499 and 2546. Quarterly and annual supports are 1833 and 1659.
 
Dow Utilities Thursday’s low was 355.28 with a daily pivot at 377.89, weekly and monthly pivots at 387.75 and 386.17. Annual and quarterly supports are 315.38 and 307.70 with annual and semiannual resistances are 456.73, 471.95 and 492.05.
 
Dow Transports Thursday’s low was 4169.05 with daily, semiannual and annual pivots at 4474, 4488 and 4324, and monthly, weekly and annual resistances at 4599, 4844 and 4955.
 
Russell 2000 Thursday’s low was 637.69 with semiannual, daily and monthly pivots at 673.50, 679.71 and 697.31, and semiannual and annual resistances at 717.69 and 723.54, and weekly and annual resistances at 735.34 and 748.99. Quarterly support is 509.08.
 
The SOX– Thursday’s low was 326.75 with daily and semiannual pivots at 347.97 and 358.89, and monthly and weekly resistances at 375.14 and 395.79. Quarterly, semiannual and annual supports are 278.30, 271.90, 259.45 and 241.05.
 
Dow Tracks – Daily and Weekly Charts
 
Daily Dow:There’s an up trend resistance line that connects highs going back to November 2009. The daily chart profile is negative with the Dow below its 21-day simple moving average at 11,038. A close below the 50-day at 10,836 indicates risk to the 200-day simple moving average at 10,185, which already happened with Thursday’s low at 9869.62. It seems that the April 26th high at 11,258 ends the bear market rally since March 2009. From low to high the Dow lost 12.3%.
 
Courtesy of Thomson / Reuters
 
Weekly Dow:The Dow ended last week below its 200-week simple moving average at 11,134, after testing the 61.8% Fibonacci Retracement of the October 2007 to March 2009 low at 11,246 with the April 26th high at 11,258. MOJO remains extremely overbought. A weekly close below the 5-week modified moving average at 10,807 shifts the weekly chart profile to neutral. My annual pivot is 11,235 with monthly, weekly and semiannual resistances at 11,274, 11,296 and 11,442. I still predict Dow 8,500 before Dow 11,500.
 
Courtesy of Thomson / Reuters
 
That’s today’s Four in Four. Have a great day.
 
Richard Suttmeier
Chief Market Strategist
(800) 381-5576
 
As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com. I have daily, weekly, monthly, and quarterly newsletters available that track a variety of equity and other data parameters as well as my most up-to-date analysis of world markets. My newest products include a weekly ETF newsletter as well as the ValuTrader Model Portfolio newsletter. I hope that you will go to www.ValuEngine.com and review some of the sample issues of my research.
 
“I Hold No Positions in the Stocks I Cover.”


Disclosure: No Positions