9:00am (EST)
The bears went into the shortened holiday week with a little momentum from the previous week and used it to push the market lower on Tuesday. Futures were signaling a terrible open and a quick test down to key support levels which had Wall Street on edge. To settle down things, the NYSE actually invoked Rule 48 which could have led to a delayed open or “reopening” on a halt but the market started on time. However, the major indexes fell below key support levels within the first 15 minutes of trading. The Dow dropped below the 11,000 mark and the S&P gave up 1,150. The Nasdaq was a stone’s throw from 2,400 before all 3 bounced back in the final 15 minutes of trading.
The strong rebound carried over into Wednesday’s session and the bulls went wild. There were no real catalysts for the rebound except for what the President might or might not say on Thursday. The test down to support and the lower end of the current trading range was met with buyers just like it has been for over 6 weeks now. This time was a little different because the surge was incredible as the market moved up nearly 3% and was back at resistance. The trip to the bottom and back to the top took 2 days. We did remind everyone that volatility would be here for awhile right?
We figured Thursday would be a flat day with the President speaking 3 hours after the close. Economic numbers were disappointing with Initial Claims coming in higher than expected and above 400,000, again. Despite the news, the market was even for much of the session before giving up 1% in the final hour of trading.
We listened to Obama’s speech and we blocked out the entire world as we tuned-in to hear what he could do to possibly save his presidency. We won’t rehash our remarks but Friday was showing a negative open despite the throwing of a $450 billion kitchen sink into the Wall Street equation. The bulls were holding ground for much of the first half but the market went into a tailspin on worries that Greece was going to fold on its debt.
The reaction was swift and although the nation’s top brass squelched those rumors, the damage had been done. The bulls put up a good fight and were trying to close the week with a win but the 3% pounding by the bears gave them the victory and the momentum.
The one bright spot is that the bulls did manage to hold our downside targets we listed in Friday’s afternoon update but will it be enough to hold off a plunge to new lows?
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Futures are pointing to a lower open and look like this: Dow (-160), S&P 500 (-17), Nasdaq 100 (-28).