The DOW has broken below the 7,500 level and the S&P 500 is dangerously close to breaking the 750 November support level. If 750 is going to be broken, it will be the commodity names that make it happen. Names like MOS and RIG – stocks that have performed well during the latest downturn – will be the stocks that push us below the November support.
The government has decided to up its stake in C, and that has pointed the futures in positive territory. Take any lift in the banks as an opportunity to sell. This group will continue to drop.
And keep an eye on technology – particularly the large cap names in the NDX. The NDX is still about 200 points above it November lows and has been trading in a steady, neutral trading range for months. It’s rare for a major to trade so independently for so long (compare it to the DOW, S&P 500 and Russell 2000). I expect the NDX to break down soon, or for the rest of the market to start performing much better soon.
