The Dow Jones Industrial Average ended down 347.80 points, or 3.20%, to 10,520.32. The S&P500 finished down 37.75 points, or 3.24%, to 1,128.15. The Nasdaq Composite decreased 82.65 points, or 3.44%, to 2,319.64. On the NYSE, declining issues outnumbered advancers by 5.8 to 1 where consolidated volume came to 11.89 billion shares compared with 7.70 billion shares traded Wednesday. All sectors declined. Short-term growth rates show basic materials and financials the weakest which is so often the case at recent extremes. At one point, prices were so lively that S&P futures flashed bids in the 1050s and 1070s nearly simultaneously.
Since yesterday’s close, Citigroup Finds `No Evidence’ Bank Was Involved in Erroneous Stock Trades. Nasdaq Investigating Potential Erroneous Trades After U.S. Market Plunge. Simon Raises Bid for General Growth. TI sees core chip revenue growing faster than mkt. Kraft Full-Year Earnings Forecast of at Least $2 a Share Trails Estimates. Las Vegas Sands Beats Estimates as Macau Gambling Lifts Revenue to Record. Hanover Insurance Q1 profit beats Street view. PerkinElmer 1st-qtr net profit rises. Crocs posts profit; outlook tops Street view. California Pizza Kitchen first quarter profit declines. UBS hires $1 mln independent broker. Goldman Sachs in settlement talks with SEC. AIG axes Goldman as its main corporate adviser. Toyota Targets $50,000 Range for Hydrogen-Powered Vehicle to Debut by 2015. US states borrow $38.9 bln for jobless benefits-GAO. U.S. Fed’s balance sheet falls. Money Supply: M-1 rose $3.5 bln, M-2 rose $20.0 bln. The 10-year yield is up 4 basis points at 3.44%. Gold is +2.70 to $1,200.00/oz. Crude oil is +0.31 to $77.42/brl.
S&P bollinger band levels are 1223, 1198, 1172. S&P 13-wk ma 1151; 39ma 1097. S&P Intraday Tested Early February Lows; Transports January Highs; VIX Soars to 40. Hopefully five days into this second advance for the VIX will be enough to give us a break. Fibonacci probably added some more followers with this reversal, so now we’ll see how the Bradley model does with its March-September decline that’s one of the worst ever, according to Arch Crawford. When we extrapolate out the relative price seasonality, it suggests the S&P could be higher in two weeks but probably below 1000 at the June low. The rally into July/August would remain below 1200 and the October low would be below the current 4-month cycle low. What actually occurs is anyone’s guess but that does sound reasonable based on 2004 and other economic cycles given the large macro economic problems that exist in this cycle. The difference if we follow Japan after the 1990s and the US after the 1930s is the downside wouldn’t reverse later this year. When we compare advancers and decliners growth rates of the current month with the previous two months, they are currently at bull market extremes, so worsening further would get us into readings associated with the previous bear market. S&P short-term growth rates have pulled back to -10%, so moving lower from here hasn’t been seen in a number of years except the previous bear markets. Calls vs puts had another 1.4x day but it takes the 10-day down to 1.80 or nearly 0.50 below the high, so that’s normally enough to get some sort or rally. We should mention that the 20-day is still above 2x. For the second half of 2008 and early 2009, all of these measures were down around 1.3x and even below at times. While China had already shown a major trend change, now the global stock index is below the 39-week moving average. So, the US and Japan have held up better than some others. The Stoxx is below trend.
