The Closing Look

Stocks fell on Tuesday causing the S&P 500 to slice below major support (Sep’s low of 2119 & Oct’s low of 2114). It also briefly broke below the psychologically important 2,100 level before buyers showed up in the afternoon. There is a lot of technical damage in the major indices. Over night, three major central banks (Japan, Australia and Canada) concluded their latest meetings without announcing more easy money. The “less dovish” stance worried some investors especially as the Fed wants to tighten in the near future. Economic data was mixed. The Markit manufacturing PMI came in at 53.4, above September’s number of 51.5. Meanwhile, the ISM manufacturing index matched expectations at 51.9, while construction spending data for September missed estimates.

Gary’s Thoughts: Except for late rebound, not much good you can take from the action as new high/new lows, advance/declines continue to be poor. On top of that, seeing more and more stocks blow up on earnings. But at the close, important indices right into the midst of vital support. As we told you, russell 2000 already has broke support.