Market Commentary – August 9th, 2011

A Few Thoughts Before the Open:

It’s about 7:00am this morning and as I write put the finishing touches on this report pre-market futures are showing a bounce higher this morning,  however that can change in a heartbeat now days.  Also,  let’s not forget we have economic news to be released this week, and that still has the potential to move the market.

I thought I would take a look at some of the support and resistance levels that might be coming into play today.

The Dow Jones Industrial Average:  The Dow Jones Industrial Average closed at 10,809.85.  I am now seeing upside resistance at 11,006.22 and downside support at 10,698.75.  If downside support at 10,698.75 fails then the next level of support comes into play at 10,415.54 on a closing basis.

I was speaking to friend of mine who I used to work with as a broker when we both just out of college.  He asked where I thought the Dow might stabilize. In looking at a longer term chart on the Dow,  I see a high probability of the Dow settling into a trading range between 10,600 and 9,600.

I’ll try to go through the support and resistance points a little later when I’ve got some extra time.  Hopefully, I ‘ll get this updated later tonight or tomorrow.

The S&P 500 Index ‘SPX’:  The S&P 500 ‘SPX’ closed at 1,119.46.  I am now seeing upside resistance on the S&P 500 at 1,127.79 I see downside support at 1,115.01, and if that level fails, then I see the next level of downside support at 1,096.48 on a closing basis.

The NASDAQ 100 Index ‘NDX’:  The NASDAQ 100 closed at 2,060.29.  I am now seeing upside resistance at 2,100 and downside support at 1,975.33 on a closing basis.

The Dow Jones Transportation Average:  The Dow Transports closed at 4,363.50.  I am now seeing upside resistance at 4,516.35 and downside support at 4,320.05.  If that level of downside support fails, then the next downside support level is at 4,277.44 on a closing basis.

In looking at the various sector indices I track, they all look extremely bad;  granted at some point there is going to be a great buying opportunity.  However, until then, some serious technical damage has been done to the market and I do not see the market bouncing back anytime soon.

My concern is that when Congress returns from its August break we are going to see the political rhetoric go into campaign mode of the nastiest proportions.  This brings back memories of early 2009.  My concern is that this may be an all too certain possibility.

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