Top Line: The amazing thing about this huge decline is the point at which it stopped, right near the support created last week. This amazing stock market marvel let's both bulls and bears hang suspended in the question of where the market wants to go next. The 12,750 area does represent some strong resistance but that is quite a bit higher than Tuesday's close.
The Update is brief tonight with the market saying it all, the Dow being down 370 points on the day. The initial cause was the release of the ISM Non-Manufacturing index, we call this the ISM Services Index. This is one of those numbers that comes out every month and has the 50 level as the line between expansion and weakness, expansion being higher than 50.
Tuesday morning's release of a very weak Services sector was pretty much immediately reflected in the price of stocks, down. What the market was expecting was a slight decrease from last month but still above 50. What it got was a huge decrease and a number well below 50, in the amount of 41.9.
There are a couple of items to note. The ISM has created a new Composite index reflecting a few different components. This new index had a number of 44.6, a little better showing than the traditional service sector index of 41.9 as reported above.
The other thing is that the number was announced earlier in the day than normal. This is highly unusual but the ISM said they were concerned about a possible breach that may have accidentally allowed the number to go out early. To make it equally available to all, they decided to announce it early. Curious. The release of this number brought about a CNN headline that said, "Recession is here - economists". (This topic will be featured on the front page of the WSJ on Wednesday, also.)
The other big item was delivered by a person associated with the Fed, Jeffrey Lacker, someone who is known more as a Hawk than a Dove, meaning they want to be inflation monitors rather than always easing monetary policy and asking questions later. His comments were, as reported in the Recession article above, that "the prominence of downside risks means that further easing ultimately may be warranted." This was taken as a white flag from the hawk and the market didn't like it at all.
FSI: 77.35 (up a bit on a very negative day--no fear in speculation land)