(By Rich Bieglmeier) Yesterday, we worried that the Dow would join the NASDAQ and S&P with bearish MACD cross-unders. Well, doing our best Ronald Reagan impression, it happened on Wednesday a.k.a. confirmation. It sure looks as if the indexes are heading to key support levels that will likely correspond with their respective 50-day averages.
Hopefully, the sell-off will end no lower than 13.250 for the Dow, 1,420ish for the S&P 500, and 3,050 on the NASDAQ - any lower than that and we got problems. If stocks can regroup from the 50-day benchmarks and hit new 2012 highs, then the last few days will be nothing but a hiccup. However, a rally that fails to reach new heights and then sets a lower, pivot low would establish a new downtrend. We don't want that.
Maybe bulls can get a dose of good medicine with economic news before the opening bell. Durable Goods and Jobless claims will be released at 8:30 am ET. Unfortunately, bad medicine is what iStock thinks we will get.
The new orders' reading was bleak in the latest ISM Manufacturing announcement, coming in at 47.1 if memory serves – remember, anything under 50 means contraction. Wall Street looks for a 5% decline for Durable Goods Orders in August. iStock believes a result below expectations is the likely outcome.
After trending lower since 2010, the four-week average for Jobless Claims is rising – not good – but seems to be capped around 390K. The consensus is for 376,000 new claims on Thursday morning. iStock recently read that unemployment is up in 26 states, up in 12, and flat in the rest. With numbers like that, we anticipate a result closer to 383,000 or more. More than 400K would be a bridge investors, and job seekers do not want to see crossed; however, it might be enough for QE4.
We will see you tomorrow with our iEstmates. It will be the last quiet week prior to 3rd quarter earnings seasons starting the week of October 8th.