Extended markets ran into resistance where expected this week, within the Sept. S&P 2810-2820 (S...
Here's how the technical levels help explain what's happened today
05/06/2010 3:44 pm EST
Yesterday’s (May 5) decline left the Dow Jones Industrial Average at 10868. That was just above the January 19 high at 10725. Technical analysts that I read overnight were saying that the market was getting to a crucial test of the January high but as long as the index closed above that level, investors were looking at a relatively minor correction in a trend that still pointed upwards.
But the gradual decline today, May 6, gradually took the index closer and closer to that key test at 10725. At 1:38 p.m. ET the Dow Industrials broke below the January 19 high and the selling began to accelerate. By 2:30 the index was down to 10596.
And then all hell broke loose.
Selling fed on selling and by 2:46 p.m.—that’s just a little over an hour after the index broke below the January 19 high of 10725—the Dow Industrials were down to 9873.
Last night technical analysts had been pointing to the February 8 low at 9908 as the next test below the January high. Well, the index did get slightly below the February low but 9873, just 35 points below the February 8 low, did mark the end of the free fall and the beginning of a rally that took the index back to a loss of just 390 point by a little after 3 p.m.
Technical markers taketh away and they giveth. At least for a few hours today.
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