Markets Plunge After S&P Cuts U.S. Debt Outlook
Good day! The week kicked off to a rocky start on Monday after the correctional bias of the past two weeks picked up steam thanks to news that Standard and Poor's cut its long-term outlook on U.S. debt to negative. The index futures had already been pulling back off Friday's highs after having established an equal move on the 15-minute time frame into Friday afternoon. They were testing support at the time the news hit the wires. Then the bottom dropped out.
Dow Jones Industrial Average
The breakdown of the indices continued many of the reversal (sell) setups we'd seen trigger over the past week and a half and many securities had their strongest losses in months on Monday. Nearly all of those losses took place by 11:15 a.m. ET. By that point the momentum was slowing as the selloff exhausted itself. Reversal patterns (buys) began to form and the market managed a fairly strong recovery throughout the afternoon, but by the time the session ended it was still the largest loss in the Dow Jones Ind. Average ($DJI) since the March 16th reaction to Japan's earthquake and tsunami.
It could have been much worse. Although all three of the major indexes still closed in negative territory on Monday, the Nasdaq-100 broke above the opening highs by the end of the session and both the S&P 500 and Dow ended the day about where it began at 9:30 a.m. ET.