Losses have built for the major indexes with the S&P 500 Index (SPX.X) 889.19 -1.39% reaching its daily pivot analysis S2 level of 890, and a close below this level would be viewed as a negative into tomorrow's session.
Similar to the intra-day and "5-minute fitted" technique we've been showing in the market monitor, a close below the 890 level would be a negative into tomorrow's open and have bearish traders holding trades overnight, but most likely lowering stops just above the 903.49 level from our weekly retracement bracket discussed in this weekend's "Ask the Analyst" column.
I would deem current levels of trade for the SPX critical support and continues technical weakness from these levels a large negative for not only the SPX, but the major market indexes as well.
The SPX does look short-term oversold and bearish traders holding current month put options that didn't like what they saw several sessions ago near 925-930 have an opportunity here to reduce some exposure, but look for rally entry points back near the 912 level, which would be this week's "pivot" point.
Tonight, I'll be closely monitoring the Bullish % charts for any type of further deterioration, which would most importantly come in reversals back into columns of "O" from the narrower Dow Industrials Bullish % ($BPINDU), S&P 100 Bullish % ($BPOEX) and NASDAQ-100 Bullish % ($BPNDX).
With the SPX at the 890 level, this is a level where we thought there might be potential for the bullish % charts in the three narrower index bullish % to need to hold, along with SPX 890 for a rebound.
As I type, I'm also getting an "upside alert" on the Market Volatility Index (VIX.X) 31.18 +8.71% at the 31.14 level and from prior commentary becomes a level where put buyers may be stepping up their put buying activity. This may be an interesting observation near-term with a correlative trade in the SPX at 890 and for those bears that use the VIX.X has a contrarian indicator, may be an action point to lock in some put option gains near-term.
The Semiconductor Index (SOX.X) 295.74 -0.56% has been whipsawed above and below the psychological 300 level today. Chip- equipment makers Applied Materials (NASDAQ:AMAT) $13.57 +0.22%, KLA-Tencor (NASDAQ:KLAC) $35.94 -0.22% and Novellus Systems (NASDAQ:NVLS) $31.05 -0.57% are off their best levels of the session after Deutsche Bank said it was raising its 2003 forecast for capital expenditures in the semiconductor industry. This call was a surprise to some considering last week's comments from Intel (NASDAQ:INTC) $16.29 -0.3% that it was cutting its 2003 capex budget.