A Look at Thursday’s Market Activity: The overall market sold off sharply on Thursday in a move that saw every index I track move lower on the day. The Dow Jones Industrial Average finished the day 391 points lower. In doing so it closed just above support at 10,719.94
The weakest sectors were the Gold/Silver, Oil Services, Commodities, Oil & Gas, Chemicals, High Tech, Airlines, Biotech, and Transports. Nothing was higher on the day. WTI Oil was lower by $5.41 to $80.51 per barrel, Brent North Sea Oil was lower by $4.87 to $105.49 per barrel, and Gold was lower by $66.40 to $1,739.40 per ounce. Wheat was lower by $0.33 to $6.3366 per bushel, Corn was $0.356 to $6.50 per bushel, and Soybeans were lower by $0.374 to $12.83 per bushel.
A Few Thoughts Before the Open: In looking at the charts from yesterday’s trading activities I have the following thoughts and comments.
1. A vast majority of the indices I look at broke through downside support yesterday. Many of them look as if they could easily test the March 2009 lows. This is an extremely negative situation. I do not see a handful of indices testing these lows and the rest of the market rallying. I think if these indices retest their March 2009 lows they will drag the rest of the market lower.
2. The Dow Jones Industrial Average closed at 10,733.83. I have downside support at 10,719.94 If the Dow closes below this level, at any point in the next few trading days, then I see the next level of support at 10,415.54. However with the current situation we could easily move through that support level in a couple of week’s worth of trading. If that is the case, then we are looking the support levels set shortly after the “Flash Crash,” where I see downside support on the Dow Jones Industrial Average coming in at 9,686.48 I think there is a very good chance we could see the Dow break through support at 10,415.54 within the next couple of weeks, and there is good chance we could see the Dow test post “Flash Crash” support at 9,686.48 within the next 4-8 weeks.
In looking at the indices I track, I have the following updates on support and resistance:
Dow Jones Industrial Average: The Dow Jones Industrials closed at 10,733.83 I currently see upside resistance on the Dow at 11,613.53 and downside support at 10,719.94 on a closing basis. If support fails to hold at 10,719.94 then I see the next level of support coming in at 10.415.54 on a closing basis.
S&P 500 ‘SPX’: The S&P 500 closed at 1,129.56 I see upside resistance on the S&P 500 at 1,218.89 and downside support at 1,127.79 on a closing basis. I think the S&P 500 is going to move lower and test 1,127.79. If support fails to hold at that level, then I see the next level of support coming into play at 1,096.48
NASDAQ 100 Index ‘NDX’: The NASDAQ 100 closed at 2,184.59 The NASDAQ 100 broke support yesterday at 2,192.96 I now see upside resistance on the NDX at 2,192.96 and downside support at 2,038.22 I see the NASDAQ 100 continuing to move lower and testing support at 2,038.22 on a closing basis. If support fails to hold at that level, then I see the next point of downside support beingat 1,975.33 on a closing basis.
The Dow Jones Transportation Average: The Dow Transports closed at 4,149.94 The Dow Jones Transportation Average broke through downside support at 4,221.60 I now see upside resistance on the Dow Transports at 4,221.60 and downside support level at 4,082.51 on a closing basis. I see the Dow Jones Transportation Average continuing to move lower and test 4,082.51 on a closing basis.
M.S. Commodities Related Equity Index ‘CRX’: The Morgan Stanley Commodities Related Index ‘CRX’ closed at 784.81. The CRX broke through downside support yesterday at 824.91 and basically closed on our second downside support level of 784.22 I now see upside resistance on the ‘CRX’ at 824.91 and downside support at 684.90
KBW Banking Index ‘BKX: The ‘BKX’ closed at 34.45. I see upside resistance on the ‘BKW’ at 35.10 and downside support at approximately 23.34 on a closing basis, basically the 2009 financial crisis closing low.
S&P Banking Index ‘BIX’: The ‘BIX’ closed 109.35. I see upside resistance on the ‘BIX’ at 120.71 and downside support at 100.96 on a closing basis.
Amex Broker/Dealer Index ‘XBD’: The ‘XBD’ closed at 79.98 I see upside resistance at 80.87 and downside support at 80.87 on a closing basis. I am expecting the ‘XBD” to continue to move lower and test 80.8763.48 on a closing basis.
S&P Insurance Index ‘IUX’: The ‘IUX’ closed at 145.82 I see upside resistance on the ‘IUX’ at 175.13 and downside support at 143.80 on a closing basis. I am currently expecting the ‘IUX’ to continue to move lower and test 143.80 on a closing basis. If the S&P Insurance Index ‘IUX’ closes below 143.80, then I expect the ‘IUX’ to continue to move lower and test 120.07 on a closing basis.
Amex Gold & Silver Index: The Amex Gold & Silver Index ‘XAU’ closed at 197.11 I see upside resistance on the ‘XAU’ at 208.47 and downside support at 189.49
Amex Oil & Gas Index: The Amex Oil & Gas Index closed at 1,032.44 I currently see upside resistance on the ‘XOI’ at 1,050.78 on a closing basis and downside support at 1,029.20.
M.S. Cyclicals Index: The M.S. Cyclicals Index ‘CYC’ closed yesterday at 762.10 I currently see upside resistance on the ‘CYC’ at 789.46 and downside support at 710.93 on a closing basis.
M.S. Consumer Index: The M.S. Consumer Index ‘CMR’ closed at 682.59 I currently see upside resistance on the ‘CMR’ at 691.44. and downside support at 657.87 on a closing basis.