Bulls Are in Control...For Now.

WMT and TGT Warn on Inflation and now we dip. Can bulls hold?

Technical Edge — 

• NYSE Breadth: 84% Upside Volume (!)

• NASDAQ Breadth: 79% Upside Volume

• VIX: ~$26.75

We had a 90% upside day on Friday, a digestion day on Monday and now an 84% upside on Tuesday. Another 90%+ upside day would have been more meaningful, but these “demand days” are nice to see. 

TGT is down ~25% in the pre-market and WMT fell 11.4% yesterday, it’s worst one-day performance in 35 years. That really says something about inflation and potentially of the consumer.

Game Plan — S&P (ES and SPY), Nasdaq (NQ and QQQ), Oil, AMZN

We are positively pleased we were bullish coming into Friday, saying there’s an “urge to surge” and “Let’s run the buy stops.” However, we can’t forget about the current trend, which is down. So in that light, we may continue higher and we may finish higher this week, but at the end of the day, this is likely just a dead-cat bounce. 

That mindset changes if we can form some sort of sustainable uptrend. But until that happens, this really just looks like a bear-market rally. 

S&P 500

We got what we were looking for with the push from sub-3950 up to the 4080 area. But now we need to see how the ES handles the 4100 to 4135 area. In this zone, we have prior support turned resistance, as well as the 61.8% retracement and the declining 21-day. 

The short-term trend is higher right now, while the long-term trend is lower. That’s something we must balance delicately. 

On the downside, bulls want/need to hold