Dow 8,400 support is gone and traders are now calling for 8,250. Should that be taken out then there will be some support at 8,000 for sure. At least, this is what trading floor chatter is as the stocks edge lower and below levels even I thought might hold as bearish trading targets as index options expire today.
In the last half-hour, the Dow Industrials, which broke their bullish support trend at 8,400, which most institutions will look to buy stocks and indexes, have now traded down another 50-points and helps negate the possibility of a "bear trap."
Despite my thoughts in last night's Index Trader's wrap, the markets have broken some "option expiration" levels I thought bears could target, and this type of action has me thinking that positions are being rolled out, and rolled out lower.
Jitters look to be building in the last hour of trading. Earlier, markets barely budged at their lows when U.S. Secretary of State Colin Powell declared that Iraq is in "material breach" of its commitments to the U.N. about its weapons of mass destruction.
Powell said his terminology was not a trigger for war, but warned Baghdad that "the world will not wait forever."
Earlier comments by President Bush referring to another deadline for Iraq late next month sent the market lower.
Chief U.N. inspector Hans Blix told the Security Council that Iraq had not provided enough information about its weapons program.
I (Jeff Bailey) am pretty sure that President Bush warned the U.N. that Iraq might look to stall or try and string things out with this regard, and I find it hard to believe that investors are overly surprised by today's news.
Volume isn't what I'd consider heavy at this point, especially nearing expiration. NYSE volume is currently at 1.16 billion shares, while NASDAQ is brisk at 1.4 billion, which is higher than we've seen in recent session.
Breadth is negative, but not overly so, with decliners outnumbering advancers by a 3 to 2 margin at the NYSE with decliners getting a little more of an upper hand on things at the NASDAQ at 5 to 3.