Line in the Sand for the S&P 500
By David Nelson, CFA
Obviously yesterday was an uncomfortable one for the bulls. Whenever we get sell offs like this we all become chart gazers looking for levels of support. Where can we draw that line in the sand? For more than a year the 120 day has been a pretty good place to start. A close below that level means we’ll probably have to circle the wagons somewhere near the 1900 level.
I talked about this yesterday on the floor with CNBC’s Bill Griffeth and Mandy Drury along with floor trader Terry Dolan. Three issues seem to hit the markets all at once:
Ebola was the most searched term on Google (GOOG) yesterday. The first reported case has hit our shores and landed in Texas. Airlines were particularly hard as they often are in situations like this. Some of the fear seems misplaced in that this disease is not airborne.
Europe is on the threshold of a triple dip recession and is in the early stages of a trade war with Russia as sanctions take hold.
I talked about the importance of a rising dollar in yesterday’s post. A strong currency can be a headwind for large cap multinationals. I’ll be paying close attention to conference calls next week as earnings kick off looking for any change in guidance or loss of competitive edge.
Before we get too bearish let’s remember we were only down 1.3% yesterday. The market’s close today is a lot more important than how we open. I’ll be back soon with more commentary. Right now it’s time to go to work.