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Trading curbs in as Dow Industrials falls 300 points

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Program trading curbs are in as the Dow Industrials have fallen 300 points, which is more than the 180-point decline where trading curbs would kick in. It would take a rally back to within 90-points of Friday's close (8,019.26) or 7,929.26 for the curbs to be lifted.

As such, it now becomes a game of "human intervention" and we have seen some technical support come in near-term at our previously identified level of retracement. With Treasuries seeing strong buying and YIELDS falling, most likely its bears that are locking in some gains at a near-term target.

Dow Industrials Chart - Daily Interval

The Dow Industrials did briefly violate the 7,740 level, which would be 80.9% retracement if retracement were taken from the relative highs to the current bearish vertical count of 7,050 from the point and figure chart. Should the Dow Industrials rally back to within 90 points of Friday's close at 7,929, I'd expect bears to be shorting, and using the September 21 lows of 8,063 or thereabouts as leverage to short from.

10-year Treasury YIELD Chart - Daily Interval

Despite some firming in the U.S. Dollar Index (dx00y) $104.50 +0.42%, the lower YIELDS in the Treasury bond market and the benchmark 10-year YIELD has cash flowing into the perceived safety of Treasuries.

The "firming" in the Dow Industrials at retracement support most likely comes from equity bears locking in some gains. It certainly doesn't appear to be coming from bulls as equity bulls have been selling stocks and rotating to Treasuries in recent months. Today's action in the 10-year YIELD doesn't look to be any different.

One Dow component I'm monitoring for strength based from Friday's market wrap at premierinvestor.net is Wal-Mart (NYSE:WMT) $45.06 -3.09%. Today's low has been $43.99, which is very near its September 17th relative low. From here, we will want to monitor for some type of trading range like that found back in September from $44-$46 as technicals from both the point and figure charts and bar chart are very similar.

Jeff Bailey
Senior Market Technician
Option Investor

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