NASDAQ Technical Picture - Weak Jobs Data Triggers Selloff as Recession Fears Loom Large

Broad market volatility moved higher this week with the VIX up 15.91% from last Friday's close, now at 24.04 and tech volatility increased with the VXN (Nasdaq Volatility Index) higher by 21.79% on the week at 28.78. The major indices reveal broad market declines this weak (on light volume due to mid-week holiday) with the Dow (heading for the worst start to a year since 1904, according to Bloomberg) and the Nasdaq leading the way lower. They say that the first week of the year is usually a good indicator for the rest of the year. If that's true, we're in for a real nasty bear market. Overall economic data this week was disappointing, most notably was the much weaker than expected read on manufacturing and Nonfarm Payrolls. The SPX lost 4.1% this week, the Dow is -4.0% and the Nasdaq is -6.0% on the week... The CBOE put/call ratio is at 1.14 today, indicating higher put trading than call trading.

The weak jobs data, pummeled stocks yesterday as recession fears became a real possibility. All sectors were hit (Utilities the sole exception). The NAZ gapped down about 30 pts. and added almost another 70, to end the session down 98 pts. from Thursday's close.

All the major indices are oversold with the high TRIN close (4.10) implying excessive selling pressure and thus raising the potential for a stabilization/rebound on Monday. The weak close Friday allows for some follow through pressure in the early going, but after six days of aggressive declines and with some sector indices near support (Housing XHB 16.61, Finance XLF 27.34 and Semi SMH 29.14/29.02), the case can be made for at least a short term pause in the selling.