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Dow and S&P's push to session lows

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The Dow Industrials (INDU) 8,332 -1.32% has extended its losses into triple-digits and has helped pull both the S&P 500 Index (SPX.X) 881 -0.74% and S&P 100 Index (OEX.X) 447 -0.72% to their lows of the session.

The violation of this morning's lows in the Dow Industrials and weekly S2 support of 8,361 has sent traders scampering and now assessing downside to our daily pivot analysis support of 8,316.

I've seen no "news" to explain today's late session bearish trade, but the downside move looks very defensive and now has our monthly pivot analysis looking to be in play as the Dow Industrials now looks to close at a 2003 low as it violates its January 2nd opening tick of 8,342.28.

As suspected, the Dow's violation of this morning's lows and perhaps the break back below 8,380 this afternoon, technology stocks have started to weaken and now well off their earlier highs.

The Networking Index (NWX.X) 156.81 +1.68% has given back roughly half of its earlier 3% gain, while the NASDAQ-100 Index (NDX.X) 1,009 +0.01% now trades relatively unchanged.

It's been a wild ride for traders in utility stock American Electric Power (NYSE:AEP) $26.57 +0.64% this afternoon. At approximately 02:15 PM EST, the stock jumped from $26.18 to $28.00 when the company announced it was declaring a $0.60 per share quarterly dividend ahead of quarterly earnings due out before the opening bell on January 24th. In recent sessions we mentioned that a Business Week article reported that several pros were short this power company on the belief that AEP is facing a liquidity squeeze and was having difficulty supporting its dividend. Today's news of the $0.60 per share quarterly dividend keeps the annual dividend yield at roughly 9%.

The Airline Index (XAL.X) 36.02 -7.04% has taken over today's top sector loser. I've seen no "industry" related news that looks any different than concerns over business and vacation travel levels. Technicals for this index look very defensive here and have broken below their December lows and challenge levels not seen since late October. Earlier today, Southwest Airlines (NYSE:LUV) $12.46 -2.8% reported earnings of $0.05 per share, which beat analyst's estimates of $0.03 per share, saying revenues rose 13.2% year-over-year to $1.4 billion.

Dow component Boeing Airlines (NYSE:BA) $31.90 -1.54% looks to make a move lower after closing below its starting to round lower 21-day and 50-day SMA's of $33.00, and looks to have downside potential back to its October lows near $29.00 near-term.

Jeff Bailey

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