Market Commentary – August 18th, 2011

A Few Comments Before the Open:

Early morning pre-open futures are indicating an almost 200 point drop in the Dow Jones Industrial Average.  While this is obviously a big move,  I would like to point out that a 200 point move lower on the Dow Jones Industrial Average will take the Dow down to its 9 day moving average, which is at 11,213 This is not a cause of panic.

I think the Dow would need to close below 11,006 before there is an indication that we have started moving lower again.  So I wouldn’t panic over this morning’s futures.

In looking at the various indices I track, I have the following comments.

Dow Jones Industrial Average:  The Dow Jones Industrials closed at 11,410.21  The Dow has basically rallied to the upper end of its trading channels.  I feel that our downside support level remain at 11,006.22 on a closing basis, and the new upside resistance level, while somewhat in flux remains around the 11,444 level on a closing basis.  Hopefully this will clarify itself in the next few trading sessions.

S&P 500 ‘SPX’:  The S&P 500 closed at 1,193.89 I see upside resistance on the S&P 500 at 1,225.85 and downside support at 1,127.79 on a closing basis.

NASDAQ 100 Index ‘NDX’:  The NASDAQ 100 closed at 2,181.62  I continue to see downside support on the NDX at 2,100  However,  upside resistance is somewhat in flux as the market recovers from an extreme sell off earlier this month.

The Dow Jones Transportation Average:  The Dow Transports closed at 4,577.18  I see upside resistance on the Dow Transports at 4,749.99 and downside support level  at 4,320.05 on a closing basis.

M.S. Commodities Related Equity Index ‘CRX’:  The ‘CRX’ closed at 900.35.  I see upside resistance on the ‘CRX’ at 924.89 and downside support at 847.10

KBW Banking Index ‘BKW:  The ‘BKW’ closed at 38.74.  I see upside resistance on the ‘BKW’ at 41.42 and downside support at approximately 36.33 on a closing basis.

S&P Banking Index ‘BIX’:  The ‘BIX’ closed 115.79.  I see upside resistance on the ‘BIX’ at 117.52 and downside support at 100.96 on a closing basis.

Amex Broker/Dealer Index ‘XBD’:  The ‘XBD’ closed at 91.29  I see upside resistance at 92.97 and downside support at 80.87 on a closing basis.

S&P Insurance Index ‘IUX’:  The ‘IUX’ closed at 163.57  I see upside resistance on the ‘IUX’ at 175.13 and downside support at 143.80 on a closing basis.

Amex Gold & Silver Index:  The Amex Gold & Silver Index ‘XAU’ closed at 212.52     I see upside resistance on the ‘XAU’ at 220.36 and downside support at 208.78

Amex Oil & Gas Index:  The Amex Oil & Gas Index ‘XOI’ closed at 1,155.31  I currently see upside resistance on the ‘XOI’ at 1,228.18 on a closing basis.  I am expecting the ‘XOI’ to continue to move lower and test 1,141.92 on a closing basis.

M.S. Cyclicals Index:  The M.S. Cyclicals Index ‘CYC’ closed yesterday at 876.88  I currently see upside resistance on the ‘CYC’ at 913.44 and downside support at 868.97  on a closing basis.

M.S. Consumer Index:  The M.S. Consumer Index ‘CMR’ closed at 700.34  I currently see upside resistance on the ‘CMR’ at 710.94 and downside support at 691.44 on a closing basis.

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