We wanted to print a little early because of the current market conditions.
The market got off to a rough start and things haven’t got much better for the bulls since the opening bell. The bears are using renewed fears that Ireland might need a bailout, Chinese inflation and concerns over the U.S. economic recovery to push the market lower and only time will tell if current support holds.
The Dow is currently down 201points to 11,000 and we have mentioned that we expected a test down to 11,000. We are near the lows for the day and if this level fails then look for Dow 10,800 to come into play.
The S&P 500 is lower by 21 points to 1,176 and we have mentioned the 1,170-1,175 area could be tested. Bingo. There is further support at 1,150.
The Nasdaq has broken below the 2,500 level and is off by 41 points to 2,472. We could see a test down to 2,450 and possibly 2,400 if the bears continue to attack.
In economic news, the Labor Department said the Producer Price Index (PPI) popped to a seasonally adjusted 0.4% for finished goods in October from September, which was below the 0.8% increase that has been expected. If you back out food and energy prices, wholesale prices declined 0.6% in October.
Elsewhere, U.S. industrial production was flat in October after falling 0.2% in September while capacity utilization also was in-line at 74.8% in October. And finally, the National Association of Home Builders said its housing market index rose to 16 in November.
The demand for General Motors’ (GM) upcoming initial public offering (IPO) continues to grow. The company now expects a price range of $32-$33 a share (which we mentioned in our Weekly Wrap on Sunday) and has increased the size of its preferred stock offering to $4 billion from $3 billion.
GM could raise as much as $14 billion on Thursday, making it the second-richest IPO in corporate U.S. history. Visa (V, $74.64, down $1.72) banked $18 billion in its 2008 debut and has been the biggest thus far.
Apple (AAPL, $301.85, down $5.19) is trading slightly lower despite announcing that its iTunes music store will now offer Beatles songs. This has been a longtime coming and the news will certainly light up sales for the holiday season after years of talks between Apple, the Beatles, and their record label, EMI Group finally paid off. No word on Kid Rock, yet…
We know it can be a little nerve-racking waiting for a breakout or wondering if the market is getting ready to breakdown but the recent correction has been healthy for the market if it is to continue its upward momentum for the rest of the year and into 2011. However, we use support and resistance to keep our emotions in check and we use this information to exit or establish new positions.
If the bulls can hold support, then we still think they can make an explosive move higher but the bears clearly have the momentum right now.