The theme on Wall Street continues to be volatility and Wednesday it was the bears’ turn to go on offense as they punished the bulls all day and took back most of Tuesday’s 5% gains. After trying to stabilize, the selloff picked up speed in the final hour of trading and we said once the European markets closed things could get interesting.
Water-cooler talk that France might be in danger of losing its triple A credit rating caused some panic despite S&P and Moody’s (MCO, $29.15, down $2.52) saying that was not the case…for now. Despite the reassurance, France’s stock market fell over 5% yesterday with their Financial stocks leading the leg down. Ditto here at home as many of the U.S. banks have Europe’s debt on their books as well.
Naturally, a lot of investors stayed with Gold which set another record high, closing at nearly $1,800 an ounce. The yellow metal spent most of the afternoon session pulling back from this level but still managed to close at $1784 an O. Silver also jumped and closed just shy of the $40 level at $39.37 an ounce.
As far as the numbers, we gave you three levels to watch yesterday for the major indexes and all of them were in play going into the close.
The Dow got hammered for 519 points, or 4.6%, to finish at 11,719. The index tested a low 10,688 and we mentioned a close below 10,800 would favor the bears and the next level they will target is Dow 10,600-10,500. If these levels fall then we firmly believe 10K will come into play over the next few weeks. Of course, the bulls will try to reclaim the 11,000 level which will act as resistance followed by 11,200.
The S&P got whipped for 51 points, or 4.4%, to end at 1,120. The low for the session was 1,118 and we penciled in 1,125 as the over/under. The close brings 1,100 back into play with the possibility of 1,050 coming into the picture if the bears keep pushing. The index traded to a high of 1,171 and short-term resistance remains at 1,150-1,175.
The Nasdaq dropped over 100 points, or 4.1%, to settle at 2,381. We mentioned the 2,400 area as key support, then 2,350 and Tech traded to a low of 2,378. If the latter level doesn’t hold, then 2,200 could be on the horizon. To the upside, the bulls will target 2,400-2,450 before getting cocky.
Futures were pointing towards a higher open when we hit the sack last night as the Dow futures were up well over triple-digits, or 1%, but were down triple-digits ahead of the jobs report. Folks, the Dow futures markets are making incredible 300+ point swings overnight. Europe’s debt and the French Banks took the overseas market lower but we are looking at a slightly positive open.
Dow futures were up 30 and are flat as we head towards the opening bell, S&P futures are down 2 points. The Nasdaq futures are up 3 points. It should be another whacky day on Wall Street. Subscribers, check the Members Area for the updates.
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