The market corrected slowly higher throughout most of the morning and early afternoon, but gave back all of those gains in less than 30 minutes beginning at approximately 13:15 ET. Although the selloff was once of the strongest we've seen in weeks, the market is likely to find support holding into Friday barring unexpected market-moving news. This can help contribute to the overall pace of the breakdown remaining weaker than the initial turn off last month's highs.
Nasdaq Composite (Figure 3)
The Dow Jones Industrial Average ($DJI) had a loss of 228.48 points, or 1.87%, and closed at 11,984.61 on Thursday. McDonalds (MCD) was the only gainer for the day. It climbed 1.19%. The worst performers were Caterpillar Inc. (CAT) (-3.88%), Exxon Mobil (XOM) (-3.56%), 3M (MMM) (-3.39%), and Alcoa (AA) (-3.07%).
The S&P 500 ($SPX) fell 24.91 points, or 1.89%, and closed at 1,295.11. All of the index's ten industry components ended the session in the red. The leaders on the downside were energy, materials, and financials. The weakest individual components were Cliffs Natural Resources (CLF) (-7.03%), NVIDIA (NVDA) (-6.37%), Netapp Inc. (NTAP) (-6.07%), National Oilwell Varco Inc. (NOV) (-5.84%), and Peabody Energy Corp. (BTU) (-5.78%). Only 26 of the index components posted a gain. Starbucks (SBUX) was the strongest, rising 9.93% after announcing a deal with Green Mountain. Iron Mountain Inc. (IRM) (+5.17%), H&R Block (HRB) (+4.28%), and Sprint Nextel (S) (+4.26%) followed.
The Nasdaq Composite ($COMPX) ended the session lower by 50.70 points, or 1.84%, on Thursday and it closed at 2,701.02. Eight of the Nasdaq-100 index components ended the session in the black. Starbucks (SBUX) (+9.93%), Netflix (NFLX) (+3.64%), F5 Networks (FFIV) (+1.75%), and Urban Outfitters (URBN) (+1.60%) were the top performers. Vertex Pharmaceuticals (VRTX) (-5.55%), and Joy Global (JOYG) (-4.16%) followed NVIDIA (NVDA) (-6.37%) and Netapp Inc. (NTAP) (-6.07%) as the index's top percentage decliners.
Unless otherwise stated, the index action described in this article relates to the E-mini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.
Toni Hansen is president and co-founder of the Bastiat Group Inc., DBA Trading From Main Street. Toni is one of the most respected technical analysts and traders in the industry. She has been trading and educating new traders, money managers, professional market analysts and traders throughout the boom and bust of the last decade. She has worked in conjunction with some of the world's top financial exchanges. Learn more about Toni Hansen and the educational services she provides through her website at http://www.tonihansen.com.