Our hearts go out to Boston, the marathoners, and the crowd cheering the runners–especially those wounded from the bombs and their families. As I am sure you have heard, two bombs blew up at the finish line of the Boston Marathon yesterday killing three and wounding over 100 runners, spectators, and race volunteers. Many lost limbs and several remain in critical condition.
Boston is the ‘big city’ where we live in New England, with a rich history from the earliest days of of the founding of America. Yesterday was Patriots Day – a huge holiday in Boston celebrating the start of the American Revolutionary War that began in Boston (memorialized as the “shot heard ’round the world” in Ralph Waldo Emerson’s ‘Concord Hymn’). Virtually everyone in the city (and many in New England) celebrate.
The bombings took place right by Copley Square in the Back Bay area – a beautiful and historic section of the city with some amazing architecture. I’ve been there many times and know it well. It is hard to see some of the pictures of that area now.
Once the news hit the internet, of course the market fell. But it was already falling well before the bombing occurred. The downdraft just got accelerated, helping to sustain and amplify the trend day down that was already in progress.
I had been seeing supply coming into the market, but was premature in seeing a turn (see this post: Is the Market About to Pull Back?). But the selling was evident. Yesterday’s downdraft was quite large. It was the largest down day since the October 2011 lows. Volume was also large, but not the largest since then. In any event, with the emerging supply seen in background, the market has turned negative, at least for the near-term. I will be watching carefully how this current week develops and then closes.
The levels to watch should be obvious: the 1530 area will likely be tested. Any rally from that point will likely have difficultly with the selling seen yesterday. A break below 1530 would likely take the market down into the 1480 – 1465 level.
One thing I will be watching over the next few weeks is the area between 1530 and 1570. This is where I saw early signs of supply over the last 4-5 weeks. If we start trading in a range between 1530 and the 1570/80 level, we could be setting the stage for a larger area of distribution, and, of course, a larger reaction. But that is speculation at this point. It is just something to be aware of.
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