Microsoft Hits Stocks. Can They Bounce?

The S&P 500 should open near a key level.

Technical Edge — 

• NYSE Breadth: 41% Upside Volume 

• Advance/Decline: 48% Advance 

• VIX: ~$20

Not a lot jumping out on the charts for me, personally. We have a few open positions to keep working, but with today’s gap-down action across the indices, I want to see how the indices hold up first. 

Microsoft’s guidance is weighing on the stock and given its size, it’s weighing on the rest of the market (and sentiment) too.

If the markets hold up, it may give some nice resets in individual stock trades. If they fold, we can shift to a more defensive state. That said, the S&P has some clearly defined levels to watch. 

S&P 500 — ES

More or less, the 4015 area held as support yesterday, but the bulls lacked any meaningful conviction on the upside. Now falling on earnings this morning, we come into the session down about 40 points. 

I am only interested in two real areas at the moment. That is 3980 and 3950-3960.

The first area is the 10-day ema and 50% retracement of the recent rally. It’s also this week’s low. 

The second zone is the 50-day moving average and the 61.8% retracement. 

One of these two zones (or perhaps both) should give bulls decent trade prospects today.

SPY