BAC drops below $5; rest of market recovers

MONDAY'S MARKET WRAP-UP

Market Snapshot for Dec. 20, 2011

Closing Prices: DOW 11,766.26 (-100.13, -0.84%), S&P 500 1,205.35 (-14.31, +1.17%), NASDAQ 2,523.14 (-32.19, -1.26%), Nikkei 225 8,340.75 (+44.63, +0.54%), DAX 5,670.71 (-31.07, -0.54%), FTSE 5,364.99 (-22.35, -0.41%)

OIL 94.30, GOLD 1,599.00, SILVER 28.85

EURO 1.2997, YEN 77.97, BRITISH POUND 1.5513, U.S. DOLLAR INDEX 80.905

Financials Once Again Take a Beating

The market has continued to face choppy trade as we head into the end of the year. The index futures were trading sharply lower Sunday evening, but made such a strong recovery following Europe's open that all three of the major indices were in the black by the time Monday's opening bell rang. The move, however, was also exhausted by that point and the indices were struggling out of the gate to hold onto those gains.

Slightly higher highs in the Dow ($DJI) in premarket trade created a Momentum Reversal short setup into the open, while both the S&P 500 ($SPX) and Nasdaq ($COMPX) joined the Dow in a gradual pullback into 10:00 a.m. ET and the 5 minute 20 period moving average support intraday. This support held initially, but the market hugged the support zone, creating a short pattern I've dubbed an "Avalanche". This forms as the indices hug initial support following a reversal off highs. As it hugs that support, volume drops, indicating a lack of buying interest even as prices attempt to recover. This pattern triggered with the 10:45 ET correction period and the premarket gains were quickly erased.

The market remained weak throughout Monday's session. The indices congested mid-day and throughout most of the afternoon, creating another short pattern. It was Bank of America's (BAC) break of the $5/share mark, however, that triggered the second wave of selling on Monday. When BAC broke, the indices quickly broke through intraday lows and the session ended near lows, albeit at support on the 15 minute time frame.

Dow Jones Industrial Average



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