Bankers got the day off, government workers got the day off, the bond market got the day off, but Wall Street was open for business. Unfortunately, the trend of the NASDAQ falling faster than its cousin indexes continued.
The index lost 0.76%, while the Dow gave up 0.35%, and the S&P backed up 0.19%. The NASDAQ's drop on wimpy volume put the index with 11 points of 3100 and a measly 18 points from violating September's pivot low close of 3,093.70. If the NASDAQ pierces and closes below 3090sih, investors need to very, very cautious as it could mark the start of a new downtrend. The question would become how long and how deep.
iStock believes the NASDAQ would fall to at least 3,050. The Dow could dip to 13,300, and the S&P 500 to 1,420ish. Lower highs followed by lower lows are the last thing bullish investors want to see - fingers crossed it doesn't happen.
As we have been saying leading up to today, third quarter earnings, and more importantly, forward guidance are about to take the bull by the horns. Will the quarterly profit checkups wrestle equities into the dirt or ride the bucking bull higher?
Alcoa (AA) is up first, tonight. Wall Street expects the aluminum company to earn a penny for the quarter. Last October's announcement was the only miss of the year for AA. In the last four years, the September quarter announcement has beat and missed the mark two times each.
Without any big economic news scheduled before Thursday's Jobless Claims numbers, the market will be at the mercy of momentum and the tone set by the first batch of profits and projections. With the NASDAQ dangerously dancing on the wire just above a potential short-term sell signal, the tape could become bloody red quickly.
iStock is watching; so, keep it here as we pass along our thoughts as events demand.
If our weekly sector review is any indication, then our shared thoughts might not be too pleasant. For the most part, all of the sectors that were trending higher hit the pause button. The street appears to be getting defensive as value stocks have moved into the buy columns. Meanwhile, growth stocks are just one tick away from turning bearish.
Technology, especially semiconductors and software look sick and chemical stocks, stay the heck away from ‘em. About the only areas that have some semblance of strength include health care and property & casualty stocks.
iStock will have its full sector report a little late today. Make sure you come back to check it out.