A Few Thoughts Before the Open:
As I write this, pre-market futures are sharply lower in the U.S. due to news form Europe that economic growth is slowing on that side of the Atlantic. Not sure where the futures will be in a couple of hours. I would like to point out that we are basically in the midst of retracement a/k/a bounce from the market’s spike downward.
Prior to market’s sell off the Dow Jones Industrial Average closed at 12,724.41 and reached a low of 10,719.94 for a decline of 2,004.97 A typical retracement is from 1/3 to 2/3rds of the move being retraced. In this case it would be between a 661.64 and 1,323.28 point move back higher. From our low of 10,719.94 on the Dow, this would put the retracement move on the Dow to somewhere between 11,381.63 and 12,043.22 on a closing basis.
Basically as of right now I think we are just in the midst of a standard retracement move, and until the Dow closes above 12,043.22 I think we could turn back lower at any point.
In looking at the various indices I track, I have the following comments.
Dow Jones Industrial Average: The Dow Jones Industrials closed at 11,482.90 The Dow has basically rallied to the upper end of its trading channels. I realize that the Dow closed above upside resistance at 11,444.08 However, if the market pulls back today as early futures are indicating, then 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 1,204.49 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 2,21412 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 4,684.44 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 907.87. I see upside resistance on the ‘CRX’ at 924.89 and downside support at 847.10
KBW Banking Index ‘BKW: The ‘BKW’ closed at 39.30. 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 116.87. 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 92.23 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 164.98 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 212.43 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 1,169.65 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 899.37 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 700.15 I currently see upside resistance on the ‘CMR’ at 710.94 and downside support at 691.44 on a closing basis.