WALL STREET : Stocks Claw Back From Heavy Losses

U.S. Stocks Fall on European Debt Downgrade,
End Week in Black
U.S. stocks began Friday pointed south, and ended the session on a decidedly downbeat note. The dive was ignited on a "modestly disappointing" fourth-quarter report from JPMorgan Chase (JPM), and word that Bank of America (BAC) could scale down its U.S. efforts. The Street was also fretting over possible debt downgrades for European Union (EU) nations. Yet, it wasn't until after midday that the hype came to fruition in the form of a downgrade to France's triple-A credit rating from Standard and Poor's (S&P). The latest consumer sentiment index reading was the only true bright spot of the day, but any semblance of optimism from that report was all but forgotten. Against this drab backdrop, all three major market indexes closed with a loss, but ended the week in the black.

The Dow Jones Industrial Average (DJIA – 12,422.06) ended the day down nearly 49 points, or 0.4%, after touching an intraday low of 12,311.79. Among the Dow's 30 components, only nine finished higher, led by a 1.1% jump by Chevron (CVX). BAC and JPM paced the bearish majority with declines of 2.7% and 2.5%, respectively. Verizon (VZ) and Procter & Gamble (PG) finished unchanged. For the week, the blue-chip barometer eked out a 0.5% gain.

The S&P 500 Index (SPX – 1,289.09) backpedaled 6.4 points, or 0.5%. However, the broad-market barometer turned in a 0.9% increase for the week. The tech-rich Nasdaq Composite (COMP – 2,710.67) fared the worst of its counterparts with a roughly 14-point, or 0.5%, drop, but finished the week with a 1.4% trek into positive territory.

ANALYSTS QUOTES

"While we cannot say that consumers are 'optimistic,' they appear much less pessimistic compared to last summer when news on the [eurozone] debt crisis turned particularly ugly and the debt-ceiling debate was fought."

“The political agreement does not supply sufficient additional resources or operational flexibility to bolster European rescue operations, or extend enough support for those euro zone sovereigns subjected to heightened market pressures.”

 “It is not the rating agencies who dictate French policy.”

HAPPY WEEKEND 

ZLBT's Weekend DJIA Charts 20/08/2011

Less said the better
A picture speaks a thousand words
And there are 2 ......

HAPPY WEEKEND

Try ..... ??? :P

ZLBT Random Charts

Please click on images to ENLARGE

HAPPY WEEKEND

SP500 Support And Fibonacci Off 1980s Low

It’s on the chart permanently now - the S&P 500 officially closed February beneath the 2002 Bear Market lows - but let’s look beyond that. Did you know the S&P 500 is at a very critical potential long-term Fibonacci support level? Let’s see it on a Monthly chart that dates back to 1980.

(You’ll definitely need to click on the chart to see the larger file)

Do you see something rather interesting?

Taken off the 1987 price low, a Fibonacci grid drawn from that level to the 2007 high price of 1,570 shows that the deep 61.8% Fibonacci Retracement comes in at roughly 735.

Today’s (and the month’s) closing Low? 735.

Perhaps there’s absolutely no significance whatsoever with that number, but it’s certainly worth observing and being aware of the possibility that buyers might swoop in at this level simply because of this development that might be taking many traders unawares.
Also, note the November lows found support 6 points above this level that formed the floor for a rally that took the index back to the 950 level.

If this Fibonacci support zone fails, then it’s likely the next possible zone of (Fibonacci) support would come in at 665, which would be the 61.8% Retracement of the Beginning of the Bull Market in 1980/1982 (when the S&P index was near 100).

Should this level fail, all bets are off.

Combining basic Elliott Wave and Fibonacci Retracements, we could certainly see a compelling argument for price to end Wave 5 and find support at the 655 level and finish off this bear market, or at least the ABC Retracement (with 2000-2003 being A; 2003-2007 being B; and 2007 - 2009 being C).

If you look objectively at the wave structure, you’ll see that we’re missing a little more room on the downside to complete the expected 5-Wave Downward Impulse that began in 2007… although technically with today’s new closing low, the expected 5-Wave structure has met the conditions to be considered ‘complete’ if price does begin to rally (which is perhaps why Mr. Robert Prechter, founder of Elliott Wave International, is doing the Speaking Circuit, encouraging investors to cover short positions immediately.

Remember, although 5th Waves can ‘truncate,’ or find support at the 3rd Wave Low (November 2008), more often than not, 5th Waves make lows slightly beyond the end of Wave 3. I’m not making the argument that stocks will fall to 665, but doing so would satisfy this requirement and the significance of the 1980/82 Fibonacci retracement.

My prior post this morning takes us deeper in the current structure, which seems to imply we’re missing at least one more swing to the downside to finish off the larger impulse.

Either way, at least according to the Wave Principle (as I understand it) and a potential Fibonacci support zone beneath us (or exactly upon us right now), we seem to be perhaps in the 8th or 9th inning of the initial downward move from 2007’s market peak.