New Year Begins with Profit Taking

On Thursday, the first trading day of the New Year, market participants took profits and sent the indices falling.The Nasdaq fell -33 points (-0.80%), the S&P dropped -16 points (-0.89%), and the Dow gave up -135 points (-0.82%). Volume on the S&P increased 45% from Tuesday. Nasdaq volume increased +27%. Decliners beat advancers by a ratio of 2 to 1, and down volume beat up volume by 2.6 to 1. This was a broad market sell off.

None of the 3 major stock indices closed below their respective 10 SMAs today. If this occurs on Friday, it would be a negative development. A bounce off the 10 SMA could occur on Friday, or Monday. The downside support zone for the Nasdaq is at 4,050 - 4,080. Support for the S&P is at 1,800 - 1,810. These levels must be watched closely. A close "above" 4,150 on the Nasdaq would be a positive development.