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Daily Blog -01/08/09- 3:20 P.M.

The DJIA and the S&P 500 may be down but they are off their worst levels of the day. Meanwhile the NASDAQ is leading the way higher with a 0.5% gain. The Dow Jones Industrial Average found support intraday at the 8650 level, which just happens to be near the 61.2% Fibonacci retracement of the recent rally. I see this as a positive development and bulls might want to buy the dip with a tight stop under today's low.

Chart of the DJIA:

Retail stocks were making headlines but the news was mixed. Retail titan and Dow-component Wal-Mart (WMT) issued an earnings warning for the fourth quarter. Shares of WMT gapped open lower and have hovered sideways with a -7.7% decline, putting a lot of pressure on the DJIA index. Meanwhile rival Sears Holding (SHLD) issued a positive earnings warning. SHLD now expects fourth quarter results in the $2.44 to $3.09 range compared to analysts' estimates around $1.90 a share. This lifted SHLD to a 23% gain and a new six-week high as SHLD tries to close above round-number resistance at $50.00.

Chart of WMT:

Chart of SHLD:

Overall the markets have taken a more positive tone in the last couple of hours. The NASDAQ composite is bouncing from short-term technical support at its rising 10-dma. The S&P 500 is back above the 900 mark and down less than two points. There was some negative consumer credit news with a drop of almost $8 billion, which is the largest dollar amount decline since they began keeping records 65 years ago. Investors remain apprehensive about tomorrow's non-farm payrolls report.

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