Mild Reaction to PPI So Far (Fed at 2pm)
Can the bulls regain a little control today?
Technical Edge —
NYSE Breadth: 36% Upside Volume
Advance/Decline: 42% Advance
VIX: ~$33.30
Game Plan: S&P, Nasdaq, Bonds
The PPI numbers were not what bulls were looking for, but so far, the market isn’t breaking.
The dollar is popping on the news, but not exploding. Bonds are dipping but not crashing. That leaves the range-trade in play for the S&P.
The 2pm Fed minutes may shake that up, but as it stands, here we go:
S&P 500 — ES
After five straight daily declines, the ES keeps finding its footing in the 3580-ish area.
Traders on both sides of the ball need to respect and recognize that. If this area breaks and then becomes resistance, then the bears can seize more control.
However, if the ES can clear the June low and take out 3650, then we could see the market squeeze out some of the weak hands on the short side.
Notice that the ES continues to build below 3650.
That’s not bullish price action really, but for shorts it has to be concerning that they can’t crack 3580. When a move takes too long, complacency builds. It doesn’t help that we’re coming into a binary situation — PPI and Fed Minutes today and CPI tomorrow.
Over 3650 without reversing puts the 10-day ema in play, then potentially 3725 to 3750.
Below 3571 is a big concern unless bulls can reverse it.
SPY
Another 30-minute chart of the SPY and you can see how that tight range is building.
Long-time members know my vocabulary of “deliberate price action” as the SPY deliberately stayed below the June low yesterday. At the same time, it continues to hold the $355.75 to $356 area.
Keep this fucking simple, traders! Ultimately, we need a range break.
If support breaks and isn’t reclaimed, the low-$350s could be on tap. If resistance breaks and doesn’t reverse, then the SPY can fly and maybe that gap-fill from Oct. 7 is in play up near $372.75.
Otherwise, we need to respect these levels until they break.
Nasdaq — NQ
Trading is not easy, but it can be simple.
11,040 to 11,070 is the upside area for bulls to break. If they can do it, 11,200 to 11,250 is in play, which is the declining 10-day ema and the 50% retracement of this decline.
If bulls can’t break that 30 point range between 11,040 and 11,070 then bears remain in control.
CEG
Let’s see if the $82 area and the 50-day can give this a bounce. A lower volume name and VIX is $30+ so as always, more risk protection and smaller size if still looking at individual setups.
Go-To Watchlist
*Feel free to build your own trades off these relative strength leaders*
Numbered are the ones I’m watching most closely.
Bold are the trades with recent updates.
Italics show means the trade is closed.
Notes:
FSLR — those who didn’t get a chance on Monday got there chance to get long yesterday and we got the $132 to $133 trim zone. Can go with a B/E stop loss here.
Conservative traders can look for $135.50 to $138 as the next trim. More aggressive traders can fish for $140.
XLE — Didn’t quite get the $78 level, but we got the 10-day ema, which was the goal. Traders can use a stop-loss near $76 for a tight trade. I would trim ⅓ on any push over Tuesday’s high of $80.85.
Relative strength leaders →
Top:
LNG — nearing the breakout near $150
MCK — Stopped earlier but still holding the breakout near $340
CAH — Just Robust
LPLA
CCRN
FLSR
ALB
VRTX
CYTK
Economic Calendar
