Thursday closed the day red across the broader markets on increased volume. Thursday marks the third consecutive distribution day for the markets. The TRIN closed at 4.38 which is the third close over 2 in 9 days. The VIX closed at 45.79 levels the market hasn’t seen since early March 2008. Gold closed the day down $5.50 to $1187.60 an ounce and oil down $1.86 to $69.01 a barrel.
Nas Composite dropped the 200dma by about 17 points, NDX by 8 points, SPX by 31 points, and the Dow by 190 points. Big marubozu candle on the day, which is a candle you look at for continuation from. The daily candles also pierced through the lower Bollinger, RSI at 31, stochastics to 20 and CCI -156-167 getting very close to oversold conditions. The market closed just over the May 6th lows. A retest of that spike is good technically for the market, but a drop here would lead to a deeper correction off the April highs. The years lows from January are getting closer and another day of selling like today would more than get us there.
Into Friday it is option expiration for May and generally the volume on expiration day is high. The week has had a lot of up and down, two trend days, a reversal day and a zig zag day. With Thursday breaking to new lows that could leave us with a digestive day on Friday. Friday doesn’t have any economic data and earnings after the bell Thursday were lackluster to trade lower. DELL and BRCD both traded off on earnings, another blow to tech. The market left us oversold so an early bounce and with such extremes we could use that bounce. ES keep us under 1077.50 and NQ 1811 we look for a modest bounce, if we climb through those levels we will look for 1083.75 on the ES and 1821.50 on the NQ.
Economic data for the week (underlined means more likely to be a mkt mover): Friday 7:00pm FOMC Member Dudley Speaks. Monday 10:00 Existing Home Sales. Tuesday 9:00 S&P/CS Composite 20 HPI, 10:00 Consumer Confidence, 10:00 HPI, 10:00 Richmond Manufacturing Index, 11:15 FOMC Member Bullard Speaks, 8:30 pm Fed Chairman Bernanke speaks. Wednesday 8:30 Core Durable Goods Orders, 8:30 Durable Goods Orders, 10:00 New Home Sales, 10:30 Crude Oil Inventories. Thursday 8:30 Prelim GDP, 8:30 Unemployment Claims, 8:30 Prelim GDP Price Index, 10:30 Natural Gas Storage. Friday 8:30 Core PCE Price Index, 8:30 Personal Income, 8:30 Personal Spending, 9:45 Chicago PMI, 9:55 Revised Consumer Sentiment, 9:55 UofM Inflation Expectations.
Some earnings for the week (keep in mind companies can change last minute: Friday pre market ANN, HIBB and nothing after the bell. Monday pre market CPB and after the bell PVH. Tuesday pre market AZO, FLO, MDT, and after the bell DY, TIVO. Wednesday pre market AEO, FRED, TOL, ZLC and after the bell DBRN, HOKU, NTAP, TTWO, PAY. Thursday pre market BIG, COST, HNZ, SNSS, TIF and after the bell ESL, JCG, OVTI, SEAC. Friday pre market FRO and after the bell NCTY.
