Monday kicked the week off with a drop closing the day with the Dow off .72%, SPX -.80%, NDX -1.06%, COMPX -1.10%, and RUT -1.44. Volume fell off today coming in significantly lighter than Friday’s volume. The TRIN closed at 1.39 bearish and the VIX at 23.53. Gold closed down 70 cents to $1317.10 an ounce and oil fell 11 cents to $81.47 a barrel.
The market put in the lows at noon and chopped for the rest of the afternoon to retrace just shy of 50% of the day’s losses. Tech really could not keep pace and ended the day with the SOX losing 1.41% leading the way on the drop. The days fall took some air out of the market, but really minor given the lift the market has experienced. On the 65 minute cash index charts (NDX, SPX, Dow) there is a possible ABC pattern, which put in its high last week. The pullbacks off each leg were VERY shallow, but still consistent and symmetrical. If this is an ABC our high is in until we see a deeper retracement, but we could retest that high or see a lower high to mark the project. We’ll watch for each possibility to setup and see if the pattern plays out.
Futures did test the weekly pivots, the ES and TF also gave the daily a look. Each filled the gaps today and with the ES starting much stronger than the NQ it made for a struggling day of tug of war to get everyone on the same page. However both did test support at 1127.25 on the Es and NQ 1960.50 and held. If the Es drops 1127.25 we could see as low as 1107.25 support. The NQ 1960.50 and onto 1920.75 could test. The ES still has 1120.50 gap open from 9/23/10. The NQ has a gap at 1952.75 from 9/17. Gaps provide support to the market. The market may retrace into 1143.25 and NQ 1986.75 for a test. If we clear those area’s the bulls are likely to perk up and push higher. A pause there look for weakness to stay with the market and move back to Monday’s low, a drop there will give us that deeper look.
Economic data for the week (underlined means more likely to be a mkt mover): Tuesday 10:00 ISM Non Manufacturing PMI. Wednesday 7:30 Challenger Job Cuts, 8:15 ADP Non Farm Employment Change, 10:30 Crude Oil Inventories. Thursday 8:30 Unemployment Claims, 10:30 Natural Gas Storage, 3:00 Consumer Credit. Friday 8:30 NonFarm Employment Change, 8:30 Unemployment Rate, 8:30 Average Hourly Earnings, 10:00 Wholesale Inventories, Day 1 of 2 for IMF Meetings.
Some earnings for the week (keep in mind companies can change last minute: Tuesday pre market WWW and after the bell YUM. Wednesday pre market STZ, COST, MON and after the bell MAR, RT. Thursday pre market ISCA, PEP and after the bell AA, MU, NUHC. Friday nothing due out.
