The Dow fell 67 points, or 0.4%, to end at 16,351. The blue-chips made a run to 16,460 but never really challenged resistance at 16,500. The index held near-term support at 16,350 but did trigger 16,325 that was a lower low than Monday and in the last 5 trading sessions. There is risk to 16,200-16,00 on a 1-2 punch.
The S&P 500 dipped 9.5 points, or 0.5%, to finish at 1,867. The index touched 1,882 on the open and came with a point of triggering fresh all-time highs but faded below support at 1,875 by the close. We figured a stretch to 1,870 might come and we said there would be further weakness to 1,850 if the bears got below this level. We have a possible put trade on deck to take advantage of further weakness.
The Nasdaq declined 27 points, or 0.6%, to close at 4,307. Tech tried to the 4,350 level after kissing 4,354 but the bulls were unable to do so. They did hold shaky support at 4,300 but the lower low at 4,295 opened the door for a possible test to 4,275-4,250.
The Russell 2000 gave back a baker’s dozen, or 1.1%, to settle at 1,187. We mentioned in our midday update to watch for a close below 1,200 as it could lead to 1,175. Tuesday’s low reached 1,183 following a 4-point pop to 1,204 shortly after the open. Side note: Our IWM possible put option trade has moved up on the Watch List.
The S&P Volatility Index ($VIX, 14.80, up 0.13) traded to a high of 14.93 after testing 13.84 on the open. At this point, it is still anybody’s game as a close below 13.50 favors the bulls. Another pop past 15 could be the real deal but remember, no flinching until 17.50 trigger
We are watching the Financials like a hawk as we have mentioned they needed to show some leadership on the next leg higher. While we have our favorites, to get a quick snapshot of the sector to see if there is strength or weakness, we suggest following the Financial Select Spiders (XLF, $22.23, down $0.15). The index has been pushing 52-week peaks and if the bears can get the action back below double-deuces ($22) it might also suggest a short-term top is in.
As we head from desk to press, here is how futures look: Dow (-11); S&P 500 (-1); Nasdaq 100 (-3).