Europe’s troubles resulted in another down day for the world’s stock markets. The Dow Jones Industrial Average fell for the sixth straight session for the longest losing streak since August. Treasury yields on the 10-year note fell to a three-month low of 1.835% as euro owners flocked to the safety of U.S. notes.
At the close, the Dow was off 97 points to 12,835, the S&P 500 fell 9 points to 1,355, and the Nasdaq lost 12 points at 2,935. The Big Board traded 940 million shares, and the Nasdaq crossed 534 million as volume picked up on the downside. Decliners outnumbered advancers by more than 2-to-1 on both major exchanges.
Yesterday, the S&P 500 failed to regain enough ground to prevent a breakdown through support at 1,357. This important support line came close to holding when the index bounced from the March low of 1,343.
The bulls are trying to stabilize what appears to be mounting pressure from sellers as downside volume has picked up on every day of the decline since Wednesday. A close below 1,343 would most certainly result in a sell-off with the next support at 1,295, just above the 200-day moving average at 1,276.
Along with a buildup in downside volume and steady negative breadth, volatility is also picking up. The CBOE Volatility Index (VIX) broke above 20 yesterday for the first time since early August, and hit an intraday high that matches the February peaks.
Conclusion: Each day of the current decline has been marked by a rally in the last hour of trading until yesterday. Stocks opened sharply lower, and then clawed most of the way back by early afternoon. But the remainder of the day was spent drifting lower — the buyers were absent.
Without a rebound today, stocks will be under enormous selling pressure with every index in an intermediate decline. The next support zones are well under current prices and just above the various 200-day moving averages. In other words, another minus day could result in a further decline of almost 5% and a long, hot summer.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
