What seemed to be a "no response" in the first half of today's session to economic data that showed the U.S. trade gap widening to $43.1 billion in January, and wholesale inventories rising a tepid 0.1% turned into a route of selling into the close, where only the dollar found buyers, while safe-haven sectors also traded lower.
Market Snapshot / Internals - 03/10/04 Close
I will admit that I was a bit surprised to see the NASDAQ-100 Tracker (AMEX:QQQ) $35.19 -1.32% sport an early morning gain, when the NYSE Composite ($NYA.X) 6,591.72 -1.59% showed little sign of strength early, and while a slow, but methodical drift lower began to form at lunchtime, when yesterday's lows failed to hold support, a major buyers boycott developed, where the major indices double their intra-day losses in the final hour of trade.
U.S. Market Watch - 03/10/04 Close
The "dragging effect" really seemed to show up in today's trade, as well as 5-day and 20-day net change comparisons, where we've been monitoring the weaker NASDAQ Composite (COMPX) against the NYSE Composite ($NYA.X).
I've marked the 4 financial sectors, which have been an important element for the SPX/OEX, where losses begin to show up in the 5- day percentage column, when compared to the 20-day percentage column suggests that even the strong sectors are succumbing to selling, which isn't that unusual when losses begin to mount in other parts of investors portfolios.
The Dow Jones Home Construction Index (DJUSHB) 666.03 -2.34% is perhaps a prime example of this, and I would urge sector bulls to be protecting gains in the sector.
After a couple of very bullish sessions for Treasuries, even their perceived safety found some profit taking in today's trade, with the benchmark 10-year YIELD ($TNX.X) rising 1.6 basis points to 3.735%.
Pivot Analysis Matrix -
I counted just 3 sell program premium alerts on a 5-minute bar chart in today's trade, and the slicing, or violation of pivot levels indicates to me that there were few willing buyers in today's trade. Only the S&P Banks Index (BIX.X) 352.10 -1.33% have yet to see trade at their WEEKLY S2, and should that level be violated, next step lower is correlative MONTHLY S1 and DAILY S2. A daily decline to 348.44 would be equivalent to today's 4.78-point decline in the BIX.X, where at that point, I would be very alert for an oversold bounce to take hold.
NASDAQ-100 Tracking Stock (QQQ) - Daily Intervals
Volume levels were once again building in the QQQ to the downside, and suggests that the near-term bottom has not yet been found. I've placed tomorrow's DAILY S2 on the QQQ chart, to try and get a feel for downside should the MONTHLY S2 be violated. For informational purposes only, and a scenario to be alert to, I'm noting that the current March option expiration (next Friday 03/19/04) Max Pain level is $36.00. Traders might be alert to a near-term trade where the QQQ undercuts the $35.00 level, where the QQQ might try and gravitate back toward the $36.00 level by next Friday.
Traders can take note of today's NASDAQ-100 Volatility Index (VXN.X) 26.05 +5.46% reading, and be alert for any type of sharp reversal lower, combined with a stabilizing QQQ, or rising QQQ, to have max pain $36.00 being in play.
S&P 500 Index Chart - Daily Intervals
How can the SPX slice below its correlative MONTHLY S1 and WEEKLY S1 like it wasn't there? I looked at an intra-day chart of the SPX and it fell through that 1,135 level like it wasn't even there, and any institutional computers set for buying had been turned off. December expiration "max pain" was 1,125, as is this quarterly expiration.
Dow Industrials (INDU) Chart - Daily Intervals
While the SPX simply sliced below its correlative WEEKLY S2 and MONTHLY S1, the INDU did find some intra-day support around the 10,434 level, but when the relative low was violated, the INDU dropped quickly, and I would have to view 10,500 as a building level of resistance. We've seen past rebounds from similar technicals shown today, but I would caution bullish traders to be disciplined with stops, as we've been seeing DIVERGENCE to past history, and something isn't right.