The selling pressure picked up steam following our midday update yesterday as the bears cracked short-term support that had been prior resistance. There will be another dance today with the 50-day MA’s and the action could be an important clue on how the market trades next week.
The Dow dropped 75 points, or 0.6%, to end at 13,170. The blue-chips pushed a high of 13,264 during the first half of trading but slipped to a low of 13,147 in the afternoon session. The bulls need just 30 points for a close above 13,200 today while the bears would love to get the action back under 13,000. The 50-day MA is at 13,126 so watch this level for a clue of further weakness should there be a pullback.
The S&P lost 9 points, or 0.6%, to settle at 1,419. The index made a run to 1,435 but closed below 1,425. We said to watch for dip buying at 1,420 and then 1,410 and the low for the day was 1,416 even. This was just a whisker above the 50-day moving average of 1,415.73. If there is a break below this level at the open, expect 1,400 to come back into play. The S&P is just a six-pack away from tripping 1,425 again and a close above this level would be bullish.
The Nasdaq fell 22 points, or 0.7%, to finish at 2,992. Tech topped out at 3,026 but couldn’t hold 3,025, and more importantly, the 3,000 level. The index closed below its 50-day (2,997) and 200-day MA’s (2,988) with the next level of support coming in at 2,975. A break below this level will quickly bring 2,950 back into play. A close above 3K would be positive going into next week.
The Russell 2000 gave back 5 points, or 0.6%, to close at 824. It’s 50-day MA is at 816. Meanwhile, the S&P 500 Volatility Index (16.56, up 0.61) jumped 4% after trading up to 16.67. As long as 17.50 is held, the bulls should be okay. Watch these two areas of technical support and resistance.
We mentioned yesterday the zombies needed to fire up the coffee pot to get a deal done and it appears they got the message. There was a meeting at the White House between Obama and Boehner which took place after the market closed. It seems there may be some progress being made but until we see some high-fiving and backslapping from the zombies nothing can be believed.
Futures are showing a mixed open and look like this: Dow (+9); S&P 500 (-1); Nasdaq (-8).