9:00am (EST)
They say history likes to repeat itself and the market is no different when it comes to this philosophy. In fact, the talking heads and market pundits are reminding you it’s 2008 all over again and it sure feels like it. Although it’s 2011, the same strategies that worked back then are working now and that was shorting the market and buying puts.
We knew when futures opened up Sunday night at 6pm (EST) there would be further selling pressure as the Dow futures flashed a negative 280 at the start. We penciled-in a 2% drop at the open, sent out a Special Alert, and the downside targets we gave you Sunday night and Monday morning were right on target by the closing bell.
We watched the action for 45 minutes because we knew there would be a slight rebound off the opening lows and we wanted to make sure the bounce was weak. It was and by the time the dust cleared, all that remained were a bunch of bears – still looking hungry.
The Dow got punished for a loss of 635 points, or 5.6%, to finish at 10,809. The index started the session testing 11,200 which immediately brought 11,000 into play and what we said to look for in our Weekly Wrap. We also said that because so much technical damage is being done at an alarming rate that it was threatening the bull market that has been strong for so long.
The blue-chips traded to a low of 10,809 on Monday and we said if “the 11,000 level fails then there is a chance 10,750-10,500 comes into play” and that “we would be prepared for a test down to 10,000”. As far as resistance, which was prior support, the bulls are looking at 11,000- 11,200 and then 11,600.
The S&P 500 got smothered for 80 points, or 6.7%, and settled at 1,119. The index went out at its lows for the day and we circled in a test down to 1,100 if the selling pressure continued. This level will be crucial in holding or it could lead to a drop to 1,050 over the short-term. The bulls will be happy to make it back above 1,140 and then 1,160.
The Nasdaq fell a jaw-dropping 175 points, or 6.9%, to end at 2,357. We absolutely nailed this call and here were our thoughts in our Weekly Wrap:
“Tech continues to look like a train wreck and dipped to a low of 2,464 on Friday once the 2,500 level was pinched. We mentioned the possibly of 2,400 coming into play (top black line, blue circles) and further support lies at 2,350 but the bears could target 2,200 (bottom black line, blue circles) if things gets ugly this week” (END)
A lot of yesterday’s sell-off was blamed on the S&P downgrade, and that had a lot to do with things, but the market is always looking forward and the global fears are real. It seems headline after headline is negative news and this is feeding the selling pressure. Anyone who has money in the market wants out.
Of course, we have been telling you that is the WRONG approach and you should be shorting stocks and buying puts while everyone is running for the hills.
People just don’t get it but our subscribers do. We scanned most of the business channels last night and not one analyst, talking head, or market pundit was smiling. All of them were worried over continued selling pressure and no one was talking about shorting stocks. Not one knucklehead said to buy put options.
The overseas markets were hammered last night with Tech and bank stocks leading the way. However, futures are pointing towards a positive open, here at home.
Dow futures are up 146 points to 10,872; S&P futures are higher by 18 points to 1,130; Nasdaq futures are showing a 38 point pop and are at 2,076. Subscribers, check for the updates inside the Members Area.
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