Most traders were property just about sick to their stomachs by the close of trading today after a roller coaster ride of a day in the stock market! The market was set to open lower, and the Dow Jones was down about 100 points within a few minutes. Fed Chairman Bernanke’s comments then sent the market lower, but Treasury Secretary Paulson’s comments indicating that the Treasury should have unlimited funds to help support Fannie Mae and Freddie Mac, along with a plunging crude oil market, helped the stock market erase a 200 plus point loss in the Dow. The Dow was looking like it might end up with triple digit gains, but the rally evaporated in the last hour, and it ended down nearly 1%. The result was a mixed market, with the Nasdaq up slightly, and the S&P 500 and Dow Transports down over 1%.
On a positive contrarian note, the VIX pushed above 30 today, before closing at about 28.5. This indicates that there is beginning to be more fear in the market, which will need to set an intermediate type of bottom.
Crude Oil was off over $6.00 per barrel today, and nearby support for many trend followers is at about the $136 level on the August Contract, which will be expiring soon. Significant moving average support is at this level as well. A break below this level, and then below $130 could finally lead to a significant break in this market. On Wednesday, all eyes will be on the supply report at 10:30 AM.
The Dollar tested its multi-month lows, before rebounding to close nearly unchanged on the day. Treasury futures closed in positive territory, but a bit off their high prices for the day.
Good Trading!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
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