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Williams Company trades spread-triple

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Shares of energy trader Williams Company (NYSE:WMB) $13.85 -10.47% has broken to a new 52-week low today and has broken the spread triple bottom we identified earlier this month. Today's break lower comes on the heels of Salomon Smith Barney downgrading shares of the energy merchant, along with other stocks in the group.

Williams Company Chart - $0.50 and $1 box

In recent weeks, we've been profiling bearish trades in several stocks in the group as the technicals unfold and where risk/reward is favorable for bearish trades.

Yesterday a downside alert was triggered in shares of Aquila (NYSE:ILA) 13.06 -5.69% at the $14.00 level. It is notable today that this is also one of the "energy merchant" stocks that Salomon Smith Barney downgraded.

Dow Industrials breaking trend

Today's trade at 9,900 has the Dow Industrials (INDU) breaking back below its bullish support trend as tensions in the Middle East weigh negatively on the market's mind. This is a rather large negative in my mind and should have traders and investors turning more cautious. Today's sell signal now has the vertical count turning bearish to 9,300.

Dow Industrials Chart - $50 box

While economic data does show some continued improvement, the tensions now rising in the Middle East between Pakistan and India have taken front stage. Regardless of what we "think" should be happening, supply looks to be getting the upper hand on things and driving stock prices lower. The Dow Industrials has found support above the 9,800 level in late April and May (red 5), but a break there most likely sees further downside.

As such, traders should be taking a more defensive posture currently and being very selective in any bullish trades.

Jeff Bailey
Senior Market Technician
Option Investor

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