Equity

Today the equity markets fell dramatically on auto industry news, some large banks reporting less profits than in January and February and on technical overbought reasons. As we wrote about last week, the equities were becoming overbought. We targeted 7450 as a major support area (basis June DJ Futures contract), the market did fall below that area today to 7381 and then closed above it at 7480.

After we received a buy signal on March 10th, we received a sell signal today. As the market is still looking overbought we could easily see the June DJ fall to the 7240 area as the next major support area. If the market continues to sell off we could see it test the lows of 6417 on March 6th as we have a major support of 6500.

We are finding initial resistance at the 7530 to 7590 level and a major resistance level of 7740. We believe the market could go lower to sideways before basing and attempting the next leg up.