Swing Trading Strategies & Stock Picks Since 2003

Dow Industrial Average

Key Statistics: Feb 08

Open: 10005.43

High: 10028.26

Low: 9906.66

Close: 9915.80

Change: 103.84 (1.03%)

RSI: 20.12

MACD: -121.34

Snapshot:

·        Weakness among financial stocks on fears like possible credit tightening policy by Fed took the broader market through a near-term technical support level to settle at a session low, and left the Dow to close below 10,000 for the first time in three months. Dow plunged 103.84 points to close at 9915.80 points with a loss of 1.03%.

·        S&P 500 Index continued to follow on heels of Dow components, fell 0.9% to 1056.74, led by a 2.2% decline in its financial category.

·        Financial stocks remained the laggards in the day, with Bank of America falling 3.47%, American Express also diving 2.8% and JP Morgan Chase shed 1.57%. 

·        As many as 28 out of 30 Dow constituents shed some ground in the session, while only two other stocks including Home Depot and Hewlett Packard gained some ground in the session.

·        All the ten sectors forming part of the Dow ended the day with some losses, with financials, industrials and basic materials leading the losers.

·        Crude oil for March delivery finished on a gain of 70 cents, or 1%, at $71.89 a barrel at the New York Mercantile Exchange. The contract rose to an intraday high of $72.39 a barrel.

·        Gold for April delivery rose $13.40, or 1.3%, to finish at $1,066.20 an ounce at the New York Mercantile Exchange. It earlier rose to an intraday high of $1,074.30 an ounce.

·        Amongst the other stocks, those which still remained in focus in the subdued market were Hasbro, CVS Caremark and Home Depot. The last of the lot was upgraded by Morgan Stanley while the other two came out with strong earnings.

·        The Dow is now already down 7.6% from its 15-month high set earlier on Jan. 19.

·        Newell Rubbermaid  rose 1.7% after Morgan Stanley lifted its investment rating on the stock to "overweight" from "equal weight." 

Strategy

Traders and investors should remain cautious, and should take long positions on stock specific basis only at lower levels. Market is all set to test the support level of up to 9700 on Dow in near future after a long gap.

Market Commentary

Weakness in stocks on fears like possible credit tightening policy by Fed took the broader market through a near-term technical support level to settle at a session low, and left the Dow to close below 10,000 for the first time in three months. Dow plunged 103.84 points to close at 9915.80 points with a loss of 1.03%. S&P 500 Index continued to follow on heels of Dow components, fell 0.9% to 1056.74, led by a 2.2% decline in its financial stocks category.

Crude oil for March delivery finished on a gain of 70 cents, or 1%, at $71.89 a barrel at the New York Mercantile Exchange. The contract rose to an intraday high of $72.39 a barrel.

Gold for April delivery rose $13.40, or 1.3%, to finish at $1,066.20 an ounce at the New York Mercantile Exchange. It earlier rose to an intraday high of $1,074.30 an ounce.

All the ten sectors forming part of the Dow ended the day with some losses, with financials, industrials and basic materials leading the list of losing sectors.

28 out of 30 stocks ended the session with moderate to sharp losses with losses logged by American Express -2.80%, Bank of America -3.47%, JP Morgan -1.57%, Travelers Co. -2.45%, United Tech -1.65%

The only two exceptions were Home Depot, which gained around 2.17%

following an upgrade from Morgan Stanley, and a modest gain of 0.57% logged by Hewlett Packard.

Amidst the other news maker stocks which were still in focus in the subdued market were Hasbro, CVS Caremark, Dun & Bradstreet and a few others.

While strong results were reported by CVS Caremark, a couple of other stocks also gained due to robust earnings up to 77% in the quarter.

The market is now in the danger of making a double dip before showing a proper recovery in the economy and a lot of market participants have started sitting on the sidelines.

The Day Ahead

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