When all news becomes ‘bad news’ the markets do panic these days. It started in Europe overnight with the DAX (-2%) and the FTSE (-1%) putting pressure on our futures contracts, and we opened slighly lower. Then, when the semi conductors started to selloff, putting a dent in the potential for a late year tech rally, the NAZ started leading the general market lower. Later, durable goods for September were reported down a more than expected 2.1%, and finally rumors of a General Motors bankruptcy added more impetus to the downside. Amazingly, another potential impulse wave stymied after a few days. I have not seen anything like this in quite a while. It’s almost like there is a bungee chord tied to the lows: every time the DOW and SPX rally, they bounce right back! The SPX has closed around 1178 (todays close) six times in the past twelve trading days.
Technically, even with the selling today, the NAZ (2064) is still above it’s low close of 2037, but the DOW and SPX are right at their lows again. Apparently, the general market is forming a base that possibly needs one final shakeout, to new lows for this correction. These are the EW pivot levels to watch:
SPX 1174 (which has held all declines thus far), and 1161 (possibly the final low).
DOW 10,142 (which has held the low thus far), and 10,063 (again possibly the final low).
NAZ 2053 (should provide support), then a retest of 2040 (which has held the low thus far).
I’m still invested, and riding this out. Unless some serious technical damage is done, I still feel we are at or near the lows of this correction, and that the bull market will resume soon. I didn’t expect this much selling. But then again, this market thrives on the unexpected. Except, of course, if you’re bearish! Good trading!