It has become a familiar pattern for the bears these days to let the bulls think they are doing something before knocking them out with a left hook before the closing bell.
Tuesday’s session started off in negative territory as futures were already pointing towards a lower open. The Dow started off with nearly a triple-digit loss before rebounding shortly after the open on encouraging economic news.
The bulls rallied back but couldn’t hold those gains as trading turned choppy for the rest of the session. Momentum tilted back in the bears favor after a government bigwig said they were starting criminal and civil probes into the Gulf of Mexico oil spill shortly before the closing bell. Our Attorney General did not mention which companies or people might be under investigation but we can already picture the lineup.
As a result, the market took another beating with the Dow threatening to fall below the 10,000 level once again. On Tuesday, the index finished with a loss of 113 points, or 1.1%, to finish at 10,024.
The S&P 500 gave back 19 points, or 1.7%, to settle at 1,070 and below the 1,075 level. If the index trades below 1,050 again we could really start to see some selling pressure.
The Nasdaq was down by 35 points, or 1.5%, and settled at 2,222. Dueces may be wild but we think 2,000 is in the cards.
Energy stocks took the brunt of the blows. BP (BP, $36.52, down $6.43) fell to a fresh 52-week low after tanking 15% and Anadarko Petroleum (APC, $42.10, down $10.23), which had their fingers in BP’s oil pie, nearly hit a yearly low after getting a 20% haircut.
Halliburton (HAL, $21.15, down $3.68) dropped 15% in sympathy and Exxon Mobil (XOM, $59.25, down $1.21) slipped 2% and back below $60 a share.
The euro slipped to a low as $1.2112, its lowest level in over 4 years, before climbing back a little. The euro has been a thorn in the market’s side for weeks now but the currency appears to be headed below $1.20 in our opinion.
As we head to press this morning, futures are showing a slightly higher open. The Dow futures are up 29 points to 10,048 while the S&P 500 futures are higher by 4 to 1,073. The Nasdaq 100 futures are showing a 12 point pop.
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