U.S. Stocks fell sharply today as traders worried about the prospects of a double dip recession. The major averages closed anywhere from down 2.65% for the Dow Industrials to over 4% for the Dow Transports. Tech stocks really took it on the chin. The charts for the S&P 500 and Nasdaq averages look quite ominous, with large breakaway gaps appearing, and the lows of the day penetrating the June and February lows on the S&P 500. In fact, the S&P closed at its lowest level since last November.
This says to me that we have broken out to the downside. In all the other cases where the S&P tested the 1040 area this year, it actually closed above 1060 each time. Today, it closed at 1041 after trading as low as 1035. As such, the neckline is broken in my view, and the next major support area is 950. The only thing that can turn this around is a major upside surprise in the jobs data this week. If it comes in weak, look out below.
Scott Cole
www.bestdaytradingstocks.com
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