Good Morning SOM traders…Last week the market reacted to news events with a gap down open on Wednesday with strong selling all day into a multiple SD drop by the close. This was followed by another gap down open on Thursday but ending with a much smaller move lower. Friday was also down but on less volume and a smaller move. Looking forward…tomorrow (Tuesday) pre-market are the Housing Starts and PPI numbers and of course this is August options expiration week. Overnight the Asian markets were slightly lower and at the time of this writing Europe is also lower. The US index futures are also slightly lower so we should expect a slightly lower opening today.
Technicals…Last week the S&P broke through all of its combined support at $1,100 showing great weakness. Last Monday I wrote “If it does ‘look out below’!” which sadly was fulfilled. The combined 20, 50 & 200EMAs that created strong technical support at the $1,100 area have now become major resistance and we are looking at swing prior lows of $1,080 (Friday’s close), $1,060, $1,040 and $1,010 for levels of possible support. On a slightly positive note while the DJI broke below its 20 & 50EMAs it held at its 200EMA but with any continued selling today it will be the last to close below. Here is what I see for technical support/resistance (all MAs are 6 month/daily, exponential):
DJI: support $10,267 (200EMA), resistance $10,386 (50EMA)
SPX: support $1,060 (prior swing low), resistance $1,100 (see above)
NDX: support $1,785 (prior swing low), resistance $1,825 (200EMA)
RUT: support $603 (prior swing low), resistance $636 (200EMA)
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This is really very good, Steven. Balanced and non-predictive.