The major indexes took a reversal lower after the open after testing their intra-day pivots and we've now seen some testing of S1 intra-day support levels and current action has me looking at further downside as the session progresses, with potential testing of daily S2 levels into their closes.
In this weekend's "Ask the Analyst" column, not only did we discuss the daily pivot analysis numbers and how they are derived, but went a step further and discussed the "new" weekly numbers from pivot analysis that tended to show some correlation between support and resistance levels with today's intra-day levels in the Dow Industrials (INDU) 8,531 -0.64%, S&P 500 Index (SPX.X) 896 -0.62% and S&P 100 Index (OEX.X) 454 -0.63%.
In our weekend "Ask the Analyst" column, it was uncertain to really derive directional trend, but with this morning's gains quickly turned into losses after an early test of the intra-day pivots, which were near-term resistance levels, it is my view that we should see some downside tests of support into the close.
While there were some correlative points found among the Dow, SPX and OEX, there were few correlative points in the daily and weekly pivot analysis in the NASDAQ-100 Index (NDX.X) 1,104 - 0.33% and NASDAQ-100 Index Tracking Stock (AMEX:QQQ) 25.19 -0.55% and so far this session, both have been able to hold just above their daily S1 support levels of 1,010 and $25.09 respectively.
Technology sectors show broader weakness, but marginally so, with the CBOE Internet Index (INX.X) 95.48 -1.52% leading sector declines, while the Networking Index (NWX.X) 154.98 +0.34% and Fiber Optic Index (FOP.X) 53.42 +0.15% both show fractional gains. Shares of Cisco Systems (NASDAQ:CSCO) $14.19 +0.43% is the most actively traded stock in this morning's market at 25.6 million shares traded.
Shares of Harley Davidson (NYSE:HDI) $42.30 -10% are trading a fresh 52-week low after just being downgraded in the last 30- minutes by CSFB to "neutral" from "outperform," on the firms concern over HDI's 2003 production capacity constraints. Earlier this morning, HDI reported Q4 (December) earnings of $0.49 per share, which beat estimates by $0.03 pear share, saying revenues rose 13.3% year-over-year to $1.03 billion, which was slightly above the $1 billion consensus.
While equities trade near their lows of the session, bonds are seeing marginal buying, but relatively unchanged after this morning's stronger than expected housing starts and building permits data. The March 10-year futures contract (ty03h) 113'280 traded up 0.06% or 2/32 with the benchmark bond's YIELD ($TNX.X) holding steady above the 4.0% level at 40.13%. Should this trade continue, I would correlate this with support at today's S2 levels in the Dow Industrials, SPX and OEX and look for potential rebound action if lower S2 supports are tested.