S&P’s chief technical analyst says the S&P 500 is closing in on the novel intraday low of 840, with the next support level at 777

By Mark Arbeter From Standard & Poor’s Equity Research

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Stock market futures are define down ahead of the start of trading Oct. 24, as markets around the world have crashed overnight. The limit prior to the open is 5%, or 60 points, on the S&P 500 futures, 550 points upon the body the DJIA futures, and 85 points on Nasdaq futures. When these limits are happy remark prior to the opening, a halt in trading occurs. These limits will increase to 10% at 9:30 am EST. The last time we saw this type of pre-market agility was a brief occasion onward Jan. 22 and, of course, onward 9/11 and for the period of the crash in 1987.

These circuit breakers were instituted in imitation of the ‘87 crash and were instituted to intercept another crash and let cooler heads have the superiority. Whether they work this time is anybody’s guess.

The global markets are tumbling with the Nikkei down almost 10%, the Hang Seng upper 8%, the FTSE almost 8%, and the DAX is lower by over 8%. Maybe this representative of estimation enacting is the sort of we finally need to clear the decks, wash things out (plane more), and help occasion some type of tradable low. But we just dress in’t be assured of.

The reasons for the limit down action in futures are more very weak incorporated earnings reports overseas and worries about the meltdown in the global economy. This has led to continued forced selling by institutions as they are forced to raise cash.

We look for some major action by the government resembling further cuts in interest rates, more stimulus packages, and if things really get out of hand in the equity markets, a mercantile halt for a time or brace or it may be longer.

Technically, the S&P 500 has undercut the October 10 closing low and is closing in on the recent intraday low of 840. Below this, the nearest support is the October 9, 2002 bear market low of 777. We are hopeful that this level would hold as the next fire-arm of support is a long-term trendline off the 1932 lows that comes in between 600 and 700.

One thing that we would like to see today is skyrocketing enjoin/call ratios, something that has been missing during the latest selling. If prices plummet from top to toe the day, we would like to see another weak opening Monday followed by a greater upside reversal.