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"A little bit lower now...."

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Stocks have given up their lows of the session as the NASDAQ Composite (COMPX) 1,121 -1.58% builds on its losses and begins to drag the Dow Industrials (INDU) 7,465 -0.81% to its worst levels of the session.

We've seen further deterioration in the Fiber Optic Index (FOP.X) 23.60 -4.6% as percentage gain on the session has just about doubled. With weakness leading lower, look for bears to begin implementing some bearish trades and the breaks looking for pay dirt near-term at horizontal support levels.

Sector action, which was rather mixed at the 01:00 PM time, has turned more negative here with Biotechnology (BTK.X) 309.33 +0.6% and the Morgan Stanley Healthcare Index (RXH.X) 316.15 +0.37% struggling to hang onto gains.

While the NASDAQ Composite breaking to another 52-week low today would weigh on investors psychology, I'd expect the Dow's losses and a close much below the 7,450 level to also have a negative impact on things. As NASDAQ bulls question where a bottom is to be found, Dow bulls know the same question needs to be addressed.

We're currently experience outage with our Market Monitor at OptionInvestor.com, but I will note that the Swing Trader Index model was triggered short in the major indexes when the S&P 100 Index (OEX.X) 397.21 traded our trigger point at 399.00. Our initial stopping level on index trades is an OEX trade at 407 and near-term target into the close is 390. From an entry point of 399, a bearish trade target of 390 would represent a broader market decline of 2.2% decline near-term.

With Treasuries seeing some buying today and the benchmark 10- year Treasury YIELD ($TNX.X) falling to 3.63% there would appear little cash right now to defend equities.

Jeff Bailey

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