Bears Continue to Claw at Market's Year-To-Date Gain

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The selling continued on Wall Street today, as the Dow Jones Industrial Average (DJI) notched a second straight session below its 200-day moving average and its worst settlement since July 25. "We saw early buyers come to the table after yesterday's big sell off, but the downward momentum just couldn't be halted, and we once again found ourselves in negative territory," remarked Schaeffer's Senior Equity Analyst Joe Bell. "The initial jobless claims number was lower than expected, but most attributed this to Hurricane Sandy creating a tough situation for people to make unemployment claims. Though economic news was light, we still had a slew of earnings reports that were mixed."

Chart of the Day : Schaeffer's Senior Options Strategist Tony Venosa, CMT, is betting on an extended downtrend for Tempur-Pedic (TPX) .

Daily Game Plan : Schaeffer's Senior Trading Analyst Bryan Sapp eyes two key levels for the S&P 500 Index (SPX) that could portend the index's short-term direction.

And now, a look at the numbers...

Early-session hopes of a rebound from yesterday's selloff were quickly dashed this morning, as stocks dipped into negative territory. Today's selling -- while not nearly as feverish as Tuesday's -- continued throughout the afternoon, bringing the Dow Jones Industrial Average (DJIA) to rest about 0.9% lower on the day, just off its intraday nadir.

Meanwhile, technicians were focused on the 200-day moving average on the S&P 500 Index (SPX). This trendline has supported all but a handful of daily closes in 2012 and had not been breached -- even on an intraday basis -- since early June. As the closing bell sounded, the SPX was off 1.2%, well south of the 1,400 level, and a hair below this significant trendline. The Nasdaq Composite (COMP), meanwhile, brought up the rear with a loss of 1.4%, and its lowest close since late July.

Finally, in a strange turn of events, the CBOE Market Volatility Index (VIX) moved lower, despite the continued declines in the broad market. The index was in negative territory throughout the day and closed off roughly 3%, settling back below the $19 region.

Today's highlight : "If you are looking for a glimmer of hope, I guess you can hang your hat on the fact that the market slowed its losses down just a little bit today," said Bell. "After being down more than 300 points on Wednesday, a decline of around 120 points may seem like a small victory for some. While price action has not been great, more and more focus will continue to move toward the uncertainty surrounding the 'fiscal cliff.'"

More of today's big stories :

And, in case you missed it ... Schaeffer's Senior Technical Strategist Ryan Detrick discussed the average true range (ATR) and what it says about the potential for more selling on Wall Street .

For today's activity in commodities, options, and more, head to page 2.

Commodities markets :

Following yesterday's brutal 4.8% loss, oil futures turned higher today, getting a lift from upbeat economic data at home and abroad. By the close, December-dated crude gained 65 cents, or 0.8%, to end at $85.09 a barrel.

Against a backdrop of the European Central Bank's decision to keep its interest rate unchanged and the nearing "fiscal cliff" in the U.S., gold futures settled higher. Despite the dollar's rise against the euro, gold for December delivery jumped $12, or 0.7%, to land at $1,726.00 an ounce.

Levels to watch in trading...

  • Dow Jones Industrial Average (DJI - 12,811.32) - support at 11,500; resistance at 14,000

  • S&P 500 Index (SPX - 1,377.51) - support at 1,100; resistance at 1,500

  • Nasdaq Composite (COMP - 2,895.58) - support at 2,400; resistance at 3,400

At the end of every market day, the staff at Schaeffer's Investment Research reviews the trading day in detail, covering major events and key market developments. Don't miss this critical, timely and insightful report. If you enjoyed today's edition of Market Recap, sign up here for free daily delivery straight to your inbox.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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