Back Under Pressure, How Will Buyers Respond?
AAPL and Bonds are selling off again too.
Technical Edge —
NYSE Breadth: 89% Upside Volume (!)
NASDAQ Breadth: 85% Upside Volume (!)
VIX: ~$31.50
Game Plan: S&P, Nasdaq
Today’s a real test for the market as investors fret over the situation in England. This type of volatility in bonds and currencies creates the risk for “something to break.” And if it does, that creates issues elsewhere — like the equities market.
We almost had a 90/90 breadth day yesterday, but the late-day dip held us in check.
Now under pressure this morning — along with bonds and AAPL — it’s a prove-it-or-lose-it situation for the S&P.
The latest problem? What’s going on in England.
One banker is quoted as saying, “It was not quite a Lehman moment. But it got close.” This all goes back to my “disjointed” observations, as bonds, currencies, stocks and other assets have had wild and outsized moves. It doesn’t feel right.
It’s integral to trading: Moving level to level.
For example, 3660 held as support yesterday. That opened the door to 3675 (Globex high), 3700, then the 3730 to 3745 zone. I don’t usually tweet live during the day, but we did yesterday. Give these tweets a read if you missed yesterday’s squeeze and try to learn from the morning setup!
SPY
The S&P is almost acting cruel at this point. Notice how on Tuesday the SPY broke the two-day low and traded to new 52-week lows. Yet, it closed back above $363.
Wednesday’s action was similar, but going the other way. The SPY cleared the three-day high but then closed just below $370.60.
So now the range builds even more and $363 support and $370.60 resistance becomes even more pronounced.
Trading $366.50 at 8:30 a.m. ET, let’s see the reaction if we rally up to $370.50-ish. Does it reject price or accept it? If the SPY is accepted and clears this area, yesterday’s high of $372.30 is in play, followed by the gap-fill level about $1 higher.
Watch $363 for support. Below it puts this week’s low in play at $360.87.
S&P Futures — ES
Yesterday’s plan proved to work almost flawlessly:
“If 3660 can be reclaimed and maintained, it puts the Globex high in play near 3675, then 3700+. On the daily, resistance has been obvious too, in the 3730 to 3745 zone. If we rally back through 3700 and hold above this level, then this zone is paramount. Active resistance is near the 10-day moving average.”
So what now?
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