In today trading session, the biggest losers are the usual suspects; Bank of America (BAC) down -5.19% to $12.60, JP Morgan Chase (JPM) down -2.81% to $38.72, Citigroup (C) down -4.47% to $4.06, and Wells Fargo (WFC) down -4.22% to $24.72 . Fear and uncertainty in regard to foreclosure escalated when big banks like BAC and JPM suspended foreclosures across the country. In addition to that, attorneys general have launched a probe into the foreclosure mess of all big banks.
The Labor Department did not have any good news for investors on Thursday either. Initial weekly claims unexpected rose +13,000 to 462,000 for week ended October 9. Wall Street economists were expecting a much lower rise of +5,000 to 450,000. Once again jobless recovery stirred fear in investors. And not surprisingly, the buying we have seen since September 01- rally is now cooling off. The Dow Jones Industrial Average closed down -0.01% to 11,094.57; the Nasdaq Composite fell -0.24% to 2,435.38; and the S&P 500 Index also dropped -0.36% to 1,173.81.
Technically, as one can see clearly from the chart, the S&P 500 has support levels at 1150, 1130, and its 200d-MA at 1120.17. The next resistance are 1180 and 1200. Since today is the second day with unusual, active trading volumes, we believe the institutions have been taking profit as the S&P 500 was up more than 11.9% since September 1st, 2010. Google Inc. shares (GOOG) were up +8.91% to $589.20 in the extended hours as the company released a better-than- expected earning report after the closing bell. Technology therefore should be the place to selectively trade long. And the financial sector is to be avoided at all cost, due to high uncertainty. Let’s be patient and let this market consolidate before making a move.