- Midday Market Check - The Dow Jones Industrial Average Tries to Rebound from 100-Point Loss - Blogs

We head into the second half of the session with the Dow Jones Industrial Average (DJIA) trying to bounce back from a 100-point loss. The intraday chart shows the selling pressure came in two waves. One hit during the first hour and was followed by a small bounce. The second wave was fairly steady and pushed the Dow to a new low for the session before a bit of bounce-back buying stepped in. The other broad market indices aren't faring any better as we have losses of more than 1%.

Drilling beneath the surface shows widespread selling pressure. The iShares Treasury Bond (TLT) is the only area in positive territory. The AMEX Pharmaceutical Index (DRG) and Amex Biotech Index (BTK) are the only decliners that aren't losing more than 1%. The Amex Gold Bugs Index (HUI), US Oil Fund (USO), PowerShares Clean Energy ETF (PBW), and Oil Service HOLDRS (OIH) are the weakest areas.

Today's selling comes at a pivotal time for the broad market indices. When I signed off on Friday I noted that the Dow Jones Industrial Average, S&P 500, Nasdaq Composite, and Russell 2000 were showing signs of losing momentum. As the updated daily charts below show, the SPX, DJIA, and RUT have now established one close below the simple trend line. The COMP hasn't yet closed below its trendline, but is trading below it today.

As discussed on Friday, a break here doesn't mean we have to see a complete reversal, but it does suggest that buyers are getting tired. One factor though that might help out here this week is a historical upside bias for expiration weeks. As Todd Salamone noted in this week's Monday Morning Outlook -

Going back to the beginning of the new millennium and, separately, since 2006, there is a much higher probability than normal for the S&P 500 Index (SPX) to close higher during expiration weeks.

However, there is also a concern embedded here too. As Todd describes it -

...when the bears do come out of hibernation during these weeks, they come out in force. The average negative week is much larger than those outside of expiration weeks.

In other words, expiration weeks tend to be higher but when they are down, the losses tend to be larger.