In focus: Struggling to stabilize

By Lawrence G. McMillan

The stock market — as measured by the Standard & Poors 500 Index SPX +1.04%   — is struggling to stabilize after last week’s breakdown below support. The onset of the massive storm Sandy on the east coast of the U.S. has not helped matters.

While the end of the month of October is usually a bullish seasonal period, trading on two of those three days was lost to the storm. Moreover, the third day — today — saw subdued activity as not all market participants were able to, or even wanted to, get to work.

As a result, the overhead resistance at 1,430 remains intact. In fact, SPX has not been able to penetrate 1,420 since its recent breakdown. Near-term support is at 1,395-1,400, and if that should give way, then a more bearish scenario should unfold. Even if the remainder of the October seasonal period kicks in (it lasts through Nov. 2), after that we would expect the market to succumb to the negative influences that are in effect...

To read the full article, subscribe to The Market Watch Options Trader.