Jul 202010

Sort of a perfect storm of sorts and I doubt the market will be able to hold itself up. Starts missed as expected but 5% was a pretty big drop. The 2% rise in permits gave it a ray of hope but that seems to be subsiding. The consumer connected stuff veiled in the IBMs earnings report as well as TI & JNJ are the real story and the GS miss is going to run through all the financials and beyond. Goldman is a major leading index for the health of the market and has been for some time. That, plus the EUR and EUR/JPY in the toilet, treasuries ripping up, gold getting pounded and oil selling off hasn’t helped and will continue to pull the S&P down if they continue. Yesterday institutions remained in a holding pattern waiting for the earnings and starts news and have been leading the selling overnight and this morning on good volume. I would be surprised if we didn’t flush down a but and see what is what down there at least down to the critical 43 handle or so which is the next major rejection area and the center of the next HVN on the composite profile. The current overnight low is right on the rejection spot on the comp as well so that is going to be the tipping point. Trend traders could probably make worse bets than shorting the break of the OL into the 43 handle this morning if and when that happens. Whatever happens today you can see we needed to do something with the range conditions the last few sessions and there are lots of good rejection and acceptance areas that are fairly clear in each direction. Should be interesting today. Watch GS and the EUR very carefully today as leaders and you will probably do alright. If all the sectors are pounding down you have to expect more volatility when fading the key levels as those are more likely to be run over conditions. Then again, maybe it won’t sell off at all. As you know, we could care less what it does as long as it goes somewhere…

 Posted by at 9:01 am

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