Goldman Sachs (GS) Wears its Golden Slacks

9:05am (EST)

The bulls went into Monday’s session knowing they were facing an uphill battle after Standard & Poor’s lowered its outlook on U.S. debt to “Negative” from “Stable” about 30 minutes before the start of trading. Futures went from bad to worse and there was panic at the open as all three indexes fell nearly 2%.

The bears, on the other hand, have been slowly gathering momentum and used yesterday’s news led a strong charge which pushed the major indexes back down to their near-term support levels.

The Dow quickly found itself in a triple-digit hole and traded to a low of 12,093 shortly after the open. The 248-point drop floored the bulls who spent the rest of the day chipping away at the losses. The blue-chips still fell 140 points, or 1.1%, and finished a point above our 12,200 downside target. The bears are showing signs of taking out 12,000 which could lead to another sell-off if this barrier is broken. Resistance remains 12,350-12,400.

The S&P dropped nearly 15 points, or 1.1%, and closed at 1,305. We mentioned strong support at the 1,300 level but this area was breeched as well with the index falling to a low of 1,294 intraday. The bears will now target 1,275 but 1,250 could be their next resting stop if they continue to push. The bulls will try to get back over 1,310 and then 1,325.

The Nasdaq dropped to 2,706 before rebounding and managed to cut its losses in half by finishing with a decline of 29 points to settle at 2,735. There is further weakness down to the 2,650 level while the bulls will try to retake 2,775 and then challenge 2,800 once again.

Futures are up this morning on better-than-expected home starts and building permits for March. Additionally, Goldman Sachs (GS, $153.78, down $3.11) reported earnings of $1.56 a share on revenue of $11.9 billion this morning which nearly doubled Wall Street’s estimates for earnings per share of $0.82 a share on revenue of $10.2 billion.

Dow futures are up 28 points to 12,168 while the S&P futures are higher by 2 points to 1,303. The Nasdaq futures are up 4 points to 2,294.

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Goldman Sachs (GS) Wears its Golden Slacks

CFTC Disclosure: