Tuesday closed the day on the lows in the red and we had a pick up in volume for a distribution day. Monday’s fall was on light volume, but Tuesday’s had more participation. The VIX closed at 27.05 just under the 27.44 10dma and the TRIN very bearish at 3.82. Gold closed the day up 10 cents to $1240.80 and oil down 71 cents to $77.90 a barrel.
The Nasdaq Composite closed under 2264.49 38.2% and the SPX dropped 1096.68 38.2% support. The NDX held over 1869.81 38.2% and the Dow held 10274.60 38.2% support. The Dow and the SPX dropped the 200dma’s with this drop. The market is still holding over the lows from last week which are getting a lot closer with today’s drop. Monday’s fall had a bounce late day to bring the market off the lows, Tuesday’s drop didn’t bring in a late day bounce. Showing no short covering and short term the indexes are oversold.
The ES fell under 1093.5, leaves us to see if the market remains under that key support and moves onto 1071.50 still well below us. The NQ has 1873.75 support then onto 1833.50 for big key levels. The TF fell through 648.20 38.2% support and now if the index stays below that key support we look for 631.10 support. The NQ did not drop 1873.75 38.2% support so the ES and TF could move back through that support to not confirm today’s drop. Tuesday did test the daily pivots and bounced off them quickly.
Into Wednesday the market is not going to be in a hurry to bounce with no urgency in the bears to cover shorts. However, the TRIN did close over 2..well over at 3.82. That extreme move along with the oversold conditions we left at the close an early bounce to work some of this move off should be expected. Don’t rule out continuation to the downside once the bounce is sold into. The Fed statement in the afternoon is probably going to give us the lunch doldrums and keep us in range until we see any statement change. I am not expecting a rate change, but we may have some indication of when the Chairman is thinking about changing rates.
Economic data for the week (underlined means more likely to be a mkt mover): Wednesday 10:00 New Home Sales, 10:30 Crude Oil Inventories, 2:15 FOMC Statement, 2:15 Federal Funds Rate. Thursday 8:30 Core Durable Goods Orders, 8:30 Unemployment Claims, 8:30 Durable Goods Orders, 10:30 Natural Gas Storage. Friday 8:30 Final GDP, 9:55 Revised UoM Consumer Sentiment, 9:55 Revised UoM Inflation Expectations.
Some earnings for the week (keep in mind companies can change last minute: Wednesday pre market RAD, SMTS and after the bell BBBY, DRI, NKE, PAYX. Thursday pre market DFS, LEN, MKC and after the bell FINL, HRB, ORCL, PALM, RIMM, SMSC. Friday pre market AZZ, KBH and nothing after the bell.
NDX (Nasdaq 100) closed -15.30 at 1880.54. Support: 18709-1869.81, 1834.01 200dma. Resistance: 1901.57, 1919.17 50dma, 1943.75, 1970.70.
