9:00am (EST)
It was another brutal day for the bulls and one that reminds everyone of 2008 all over again. We will have a big update this afternoon for you but one point we want to make this morning is – don’t get scared or be scared. Let’s go over the numbers first and then we will tell you why this could be one of the best times to invest in options later today.
The Dow started off in negative territory and the snowball tuned into an avalanche as the index fell a stunning 512 points, or 4.3%, to close at 11,383. The blue-chips were holding the 11,600 level we outlined on Sunday night at lunchtime and into the close but the Tom Petty freefall shaved another couple hundred points off the Dow in the final hour of trading. Quick chart work shows us 11,000 could come into play if the beatings continue.
The S&P got hammered for a 60-point loss, or 4.8%, and finished at 1,200 even. We mentioned once 1,250 was broken the index could trade down to 1,225 which is where it spent much of the session before giving up another 25 over the final hour as well. Next levels of support will be 1,150 but 1,100 isn’t out of the question if the bears keep attacking (see below).
The Nasdaq was peppered for triple-digits and lost over 5% as Tech tanked 136 points to settle at 2,556. We circled 2,600 in our Weekly Wrap as an area to watch and it too, was at this level heading into the last 60 minutes of trading. The bears added another 50 for extra fluff as you can see. The bulls will now try and hold down 2,500 but there is risk down to (gulp) 2,400.
The S&P Volatility Index (^VIX, 31.66, up 8.28) surged 35% yesterday and we mentioned the break above resistance (bottom red line) on the VIX would spell t-r-o-u-b-l-e for the major indexes. We got our crayons out this morning and we are thinking outside the black box with our notes and thoughts…sometimes a picture is worth a 1,000 Dow points.
Of course, yesterday’s smack-down was simply a prelude to this morning’s action and the job’s number.
Futures were down significantly when the overseas markets opened for trading but gradually improved throughout the morning and turned positive once we got a better-than-expected jobs report. We added 117,000 in July and the unemployment rate fell to 9.1%.
Futures soared on the news with the Dow futures up 160 on the news. However, it was short-lived after the report started being dissected by Wall Street.
As we head to press, here is how we look: Dow futures (+65); S&P (+10), Nasdaq (+13).
Subscribers, check the Members Area for the updates and be on the lookout for new trades if we see something we like.
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