After an initial foray north of breakeven, U.S. stocks spent the rest of the session swimming in red ink today. An encouraging earnings report from JPMorgan Chase (JPM) fueled early optimism on the Street, and investors even seemed to shrug off threats of a U.S. debt downgrade from Moody's. However, the celebration was short-lived thanks to testimony from Federal Reserve Chairman Ben Bernanke, whose clarifications of Wednesday's stimulus talk took the wind out of the bulls' sails. The central banker's comments that the Fed is "not prepared at this point to take further action" sent stocks reeling, and not even stronger-than-expected data on both the retail and jobless fronts could stop the proverbial bleeding.
The Dow Jones Industrial Average (DJIA – 12,437.12) traded as high as 12,581.98 today, but eventually settled with a loss of 54.5 points, or 0.4%. Today marks the index's third straight finish south of both the 12,500 level and its 10-day moving average. Among the Dow's components, only seven muscled into the black, led by JPMorgan Chase's 1.8% gain. Meanwhile, Alcoa (AA) paced the 23 laggards with a loss of nearly 2.5%.
Likewise, the S&P 500 Index (SPX – 1,308.87) tagged an intraday acme of 1,326.88 before giving up 8.9 points, or 0.7%. However, the broad-market barometer's 20-day moving average helped to limit the technical damage. Finally, the Nasdaq Composite (COMP – 2,762.67) jumped as high as the 2,817 level before turning tail. By the close, the tech-rich index swallowed the steepest loss of its peers, surrendering 34.3 points, or 1.2%.
Dow Jones Industrial Average
The Dow closed lower on Thursday extending this week's decline. The low-range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term.
Closes below the 20-day moving average crossing at 12,312 are needed to confirm that short-term top has been posted. If the Dow renews the rally off June's low, May's high crossing at 12,876 is the next upside target.
First resistance is the 87% retracement level of the May-June decline crossing at 12,752. Second resistance is May's high crossing at 12,876. First support is today's low crossing at 12,415. Second support is the 20-day moving average crossing at 12,312.
HAPPY TRADING
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