Thursday, October 1, 2009

Correction in Motion

Yesterday in this space, it was reported that the stock market was ripe for a major sell-off and that's exactly what happened after the weekly unemployment claims data and a worse-than-expected ISM report hit the Street.

Stocks opened lower and stayed down, erasing Wednesday's bottom by 10:00 am and never recovering. Eventually, all the major averages suffered their worst losses since July 2nd when the Dow was battered 223 points and the S&P declined 27, the same as today. The NASDAQ suffered worse than its counterparts, falling 3.06%, nearly matching the worst one-day loss since the start of the current rally, on April 20.

Thursday's action marked the sixth decline for the market in the past seven sessions. Economic news has been uniformly weak over the past two weeks, leading investors to take profits or abandon positions altogether.

Dow 9,509.28, -203.00 (2.09%)
Nasdaq 2,057.48, -64.94 (3.06%)
S&P 500 1,029.85, -27.23 (2.58%)
NYSE Composite 6,718.05, -192.83 (2.79%)

Simple indicators confirmed the widespread carnage. Declining issues outnumbered advancers, 5314-1139. New highs led new lows, 205-51, though the margin of difference has declined markedly over the past three sessions. Volume was very high, indicating that the losses are not about to end here, especially since the indices ended at their lows of the day.

NYSE Volume 6,905,833,500
Nasdaq Volume 2,751,787,500

Oil finished the day 21 cents higher, at $70.82, but that bucked the overall trend. Gold lost $8.60, to $1,000.70. Silver was down 22 cents, to $16.44.

With the September non-farm payroll data set to appear at 8:30 am, it was obvious that many investors did not want to get in front of that number. All indications are that it will not meet expectations of -175,000. Something in the range of -190,000 to -215,000 would be more likely.

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