During most of yesterday's session, buyers looked like they were
just taking a breather following a major sell-off and then a sudden
reversal up. But during the last two hours of trading, sellers
entered and drove the
Dow Jones Industrial Average
) to the first triple-digit decline since last week.
With a lack of positive news, investors focused on the tepid
weekly jobless claims report. Although initial claims were about
what was expected, continuing claims were higher than
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The S&P 500's (
) consumer-discretionary sector was hit by several earnings
) fell more than 5% following a better earnings report, but issued
a forecast that was not in-line with analysts' expectations.
Urban Outfitters, Inc.
) lost 6.7% after saying that expenses rose more than some analysts
) fell 4.9%, while
) lost 3.6%.
The euro fell to 1.2530 as sovereign debt worries continued to
plague the Greek bailout. The U.S. dollar index rose 0.7%.
At the close, the Dow was off 114 points to 10,783, the S&P
500 fell 14 points to 1,157, and the
) fell 31 points to 2,394.
The NYSE traded 1.2 billion shares, and the Nasdaq traded 637
million shares, both with decliners over advancers by almost
Crude oil for June delivery fell $1.25 to $74.40 a barrel, and
Energy Select Sector SPDR
) was off 37 cents to $57.38.
June gold fell $13.90 to $1,229.20 an ounce on profit-taking,
PHLX Gold/Silver Sector Index
) fell 3.3 points, closing at 182.76.
What The Markets Are Saying
Volatility has fallen from the heights of last week, but
yesterday, it hopped up to 26.68, which places it in the highest
range in more than six months. This indicates that there will most
likely continue to be wide swings in both directions for at least
the next several weeks.
After months of plodding ahead, making an average gain of just
2.5 points per day, the market topped on each of the major indices
in late April, traded briefly in small reversal formations, and on
May 4, broke lower. But the break temporarily held on each index's
50-day moving average.
Then, on Thursday May 6, all three major indices sliced through
the 50-day moving average like a knife through butter. The attack
lower didn't stop until it had slightly overshot the 200-day moving
averages on each index. It was the biggest one-day loss in history,
with the Dow falling 779 points from intraday high to low. But late
that afternoon, much of the loss had been regained and the
integrity of the 200-day moving averages was preserved.
The major support at the February lows of the indices held with
reversals from just under their respective 200-day moving averages.
Then, on Monday, each index ran smack into primary resistance at
its 50-day moving average.
From Monday until yesterday, buyers unsuccessfully pounded the
50-day until the Dow reversed with a triple-digit decline. This
sets up the markets for a test of the support zones just below
The immediate next support zones for each average are as
10,550 to 10,730
1,115 to 1,150
2,270 to 2,320.
Today's Trading Landscape
Earnings to be reported before the opening:
Economic reports due:
retail sales (the consensus expects 0.2%, and 0.5% less autos),
industrial production (the consensus expects 0.6%, capacity
utilization rate (the consensus expects 73.7%), consumer sentiment
(the consensus expects 73.8), and business inventories (the
consensus expects 0.4%).
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