IRIS Wealth Creation & Management

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Daily Market Summary & Analysis, SEPT 29, 2010

Wall Street closed in red today due to bad news from banks. Major negative headline came from Bank of America Merrill Lynch as the firm said it will be laying off 20 to 30 proprietary traders. As we all know by now, institutional trading volumes have been light all through the year 2010. Analysts from major Wall Street firms have cut estimates for banks, due to the fact that proprietary trading no longer a hugely profitable business for giant banks. Meredith Whitney, a prominent banking analyst at Meredith Whitney Advisory Group predicted as many as 80,000 Wall Street professionals will be lay off in 2011.

Adding to the sour note, JPMorgan Chase & Co. is also closing down its proprietary trading unit, elimination about 80 jobs. Pimco “bond king”, Bill Gross once again stated his firm’s bearish view for the U.S. equities market, predicting a single digit returns for 2011. In addition to that he also warned the market about the social and financial issues as the baby boomers would barely have enough money to retire. The “doom & gloom” from the financial sector and negative comments from the “bond king” dragged the entire market down as selling accelerated by the closing bell. The DOW closed at 10,835.26, down -0.21%, Nasdaq down -0.13% to 2,376.56, and the S&P 500 down -0.26% to 1,144.73.

Technically, this market needs to consolidate the historic biggest gain for the September month since 1939. As we stated in yesterday report, the 1150 level is very critical to both the bulls and the bears. Market participants will continue to short into this resistance if the market does not have institutional buying to support the upward move. The S&P has failed three times today and selling accelerated at 3PM as the index could not move above 1150. Traders will be watching this level closely. And with all the “doom & gloom” news from Wall Street, the 1150 mark will remain a very strong resistance going forward. Supports for the S&P 500 index now are 1130, 1118, and 1100. Resistance are 1150, 1160 and 1170.

Best regards to all, and good luck in your trading. 
Disclosure: No positions in stocked mentioned of time of writing.

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