NASDAQ Selling

The NASDAQ volume of selling is even greater than the S&P 500!

IBM In Talks to Buy Sun Microsystems?

A merger possibility among two technology giants? Wow! It has kept the NASDAQ futures from slipping into negative territory with the other stock index futures. From Marketwatch:

Sun Microsystems Inc. saw its shares shoot up by more than 66% Wednesday following reports that it is in talks to be acquired by IBM Corp. for as much as $6.5 billion in a deal that would put hardware back at the core of Big Blue's operations and bolster its computer-server business, according to a published report.

Sun (+65.4%) climbed $3.31 a share to $8.27 after the Wall Street Journal reported that a deal with IBM could be reached this week, but that the talks are not certain to go through.

Here is a link to the full story.

S&P 500 Breaks Through Support Also

The S&P 500 Index has also broken through key support at 1330. It is doesn't rebound by the end of the day, or if it goes substantially lower, prices will likely go much lower still in the near future. We may test the lows of last Spring.

The NASDAQ too is plunging, but without support levels, it goes down even faster!

Hints Toward Higher Stocks

I will often look at other stock index futures for hints of what my trades will do. Here are two. Based upon what these two charts are doing, what would you expect the Dow futures to do? My instinct (bias) for stocks to reverse downward, as I mentioned in my last post, may have been mistaken.

Divergences May Form
However, if prices on these two indexes move only slightly higher, then divergences are likely to form on some indicators, suggesting bearish reversals. Divergences on the Klinger Volume indicators, MACD, or Bollinger Squeeze indicators, are signs of waning momentum and eventual reversal. Astute traders are always looking for them. In the futures markets, it take much more capital to push prices higher, while it only takes a lack of new buying interest for prices to collapse and head lower. I believe I learned this from reading John Mauldin's free weekly newsletter. (This fact also suggests that speculators don't have the power to send prices higher, as suggested by those who would blame traders for higher commodity prices. They ascribe to us too much -- undeserved -- credit. )

S&P 400 Mid-Cap futures

The CME is eliminating the Russell 2000 Index futures following the Sept 08 contract. They are recommending that traders switch to the S&P 400 Mid-Cap or a few others mentioned on the CME website, alternatives to the Russell 2000 futures.

NASDAQ Index futures