A Look at Friday’s Activity: The overall market moved sharply lower in a broad based move that saw every index I track move lower on the day. The weakest sectors were the Airlines, Broker/Dealers, Chemicals, Oil Services, Banking, Cyclicals, High Tech, Commodities, the Retailers, and the Transports. Oil was lower by $2.94 to $79.20 per barrel, and Gold was higher by $4.90 to $1,620.40 per ounce. In the grain markets, Wheat was lower by $0.45 to $6.092 per bushel, and Corn was lower by $0.40 to %5.924 per bushel, while Soybeans were lower by $11.79 per bushel.
A Few Thoughts Before the Open: In looking at the charts from Friday’s market activity I did not see a single index or stock that I would consider buying. Everything has a negative pattern. My concern in looking at the charts is that it appears that the selloff, or market downturn, could accelerate and we could see a repeat of August; only this time to lower lows.
The Bottom Line: I’ve been saying that I felt the market was in a sideways pattern with a downside bias. While my 1st Rule of Trends is that a trend remains in place until it is broken. However my 2nd Rule is that the longer a trend remains in place, the greater the chance of it being broken. One or Two more down days and we could see a retesting of the August lows.
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 10,913.38 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 1,131.42 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 2,139.18 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 4,189.37 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 761.16. I now see upside resistance on the ‘CRX’ at 824.91 and downside support at 684.90
S&P Banking Index ‘BIX’: The ‘BIX’ closed 113.16. 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 63.48 on a closing basis.
S&P Insurance Index ‘IUX’: The ‘IUX’ closed at 152.88 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 185.00 I see upside resistance on the ‘XAU’ at 208.47 and downside support at 177.39
Amex Oil & Gas Index: The Amex Oil & Gas Index closed at 1,031.82 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 765.15 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 686.20 I currently see upside resistance on the ‘CMR’ at 691.44. and downside support at 657.87 on a closing basis.