Dow Jones Industrial Average (DJIA) components International Business Machines (IBM), Bank of America (BAC), and General Electric (GE) delivered earnings that left traders wanting and stocks retreated as a result. IBM beat expectations but encountered sellers after running up 10 points in advance of its earnings announcement. BAC and GE simply disappointed. Their numbers reinforced the notion that individuals and businesses are still struggling with their debt loads. Google (GOOG) beat handsomely but that was not enough to save the NASDAQ from sliding.

  

The Dow Jones Industrial Average (DJIA) declined by 67.03 points (-0.67%) to 9,995.91 The S&P 500 fell by 8.88 points (-0.81%) to 1,087.68 while the NASDAQ dropped by 16.49 points (-0.76%) to 2,156.80.

  

The market internals were definitively negative. Decliners beat advancers by nearly a 2 to 1 ratio on the NYSE and by more than 2 to 1 margin on the NASDAQ. About 75% of the volume on the NYSE and 77% of the volume on the NASDAQ traded to the downside. Volume was moderate. Financials were hammered (-2.6%) and the materials stocks (-1.4%) also showed weakness.

  

We had our first round of significant earnings shortfalls today. The DJIA was off by 123 points in the early going and stayed at those levels until midday. A minor rebound, aided partially by a move in oil to a new 2009 high at $78, cut the losses by half.

  

We were certainly overdue for a down day. However, one day of decline after a 6% upside move does not constitute a victory for the bears. As noted in this space two days ago, taking a portion of one's profits here is a prudent move. Utilizing sell stops and options hedging can also be used to protect profits. The probabilities still favor the bulls but the easy money in this move appears to have been made.

  

Earnings should continue to be the primary determinant of market direction for another week. The week begins with Apple (AAPL) on Monday and concludes with Microsoft (MSFT) on Friday. At that point, the market should have a handle on the quality of Q3 earnings and the technicals should begin to reassert themselves.

  

The number of companies reporting kicks into high gear next week. Gannett (GCI) is the highest profile name early on Monday while tech giants Apple (AAPL) and Texas Instruments (TXN) come after the close.

  

 

Significant Numbers To Watch

 

DJIA

9116 - Support, the 08/17/09 low

10310- Resistance, the 10/34/2008 low

9577 - 50-day simple moving average

8522 - 200-day moving average

 

S&P 500

978 - Support, the 08/17/09 low

1098 - Resistance, the 10/03/2008 low

1036 - 50-day simple moving average

909 - 200-day moving average

 

NASDAQ

1929 - Support, the 08/17/09 low

2318 - Resistance, the 10/03/2008 low

2059 - 50-day simple moving average

1757 - 200-day moving average