S&P Holding Support, But Struggling to Rally
Bank earnings continue to disappoint
Technical Edge —
NYSE Breadth: 85% Downside Volume
NASDAQ Breadth: 50% Downside Volume
VIX: ~$26
Game Plan: S&P 500, Nasdaq, Oil
You can usually get a good feel for the market based on individual positions.
Notice how when the S&P was trading well, we had great trades lined up with individual stocks (MRK, MCK, DG, GOOGL, AAPL).
Then our runners were getting stopped out and the number of open trades started to shrink. That’s as the index has fallen five days in a row now. Interestingly, the VIX is down two days in a row too.
DLTR has been the exception thus far, as we look trim even more this morning (*please see the Trade Sheets below*). But this observation is just one more way to find “clues” on the market.
S&P 500 — ES
Yesterday we said: “We could see a push to 3800 today. 3800 to 3825 is a tough area of resistance right now.”
That still seems to be the case, with the Globex high clocking in at ~3812. Keep an eye on this level and see if the ES can clear 3825 — putting it back above the 10-day and 21-day moving averages.
If it can do that and sustain above 3825, I do think that could open the door back to the 3900 level and resistance between 3920 and 3950.
On the downside, it remains quite clear that 3740 is key for the bulls. It wavered yesterday, as the ES made a low of ~3724, but the futures bounced and reclaimed 3740+.
On the upside I’m watching 3800, 3812 then 3825. Over 3825 without reversing and the ES can run a bit. On the downside, I’m watching 3780, 3740, 3724 and 3705.
S&P 500 — SPY
When things get complicated, I try to get simple. $380.50 to $382 is the area to clear on the upside. Below that zone and I have a hard time getting bullish. Above that zone and $390 to $393 is in play.
On the downside, $372.90 to $374 is the zone to hold. Below that level puts yesterday’s low in play at $371. Below that and it looks quite bearish.
Nasdaq — NQ
11,525 is key on the downside, as you can see from back-to-back sessions at the lows.
On the upside, yesterday’s high at 11,835 is key. Above it creates the potential for a daily-up rotation, as well as a move over the 10-day. That puts 12,000 on the radar for me, followed by a possible push to 12,250 in the coming days.
Below 11,725 creates concern for the bulls and opens the door to 11,525. Below 11,525 puts 11,350 to 11,380 in play.
Nasdaq — QQQ
Super simple: $280 is the first layer of support, then $277. Below $277 puts the low in play and the 200-week moving average.
On the upside, over $288 today gives the QQQ potential for a 2x daily-up rotation. That’s followed by the mid-$290s.
Bears need to break $277. Bulls need to break $296.50.
Oil — CL
First target zone of $97 to $98 was hit. Now looking for $100 & the 10-day. I’m working against a break-even stop on this one now.
Go-To Watchlist — Individual Stocks
*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.
Trade Sheets: DLTR traded well yesterday.
MCK — We have hit two trim zones so far on MCK. Feel free to cash the last ⅓ of the position as you see fit. $335 to $340 is a potential upside target if it continues higher. Moving stop-loss up to $315
$335 hit on Monday, up to you on how to manage from here. I’m holding the last ⅓ against a profitable stop-loss.
DG — Maybe this is the wrong move, but with DLTR also in our pocket, I am going to cash the remaining ⅓ position in DG at the open.
MRK — Hit Targets 1 & 2 → Now out of ½
$90 to $91 Stop Loss (or B/E).
Looking for $95+ for ¼, then not sure. Maybe hold the last ¼ for a push to $100 if we don’t get stopped out. d
DLTR — Long entry triggered. Hit our first price target yesterday ($167 to $168). Now looking for $169.50 to $170+ for our second trim.
Stop-loss inched up to $162 or up to B/E. As always, your choice.
Relative strength leaders (List is cleaned up and shorter!) →
DLTR
MRK
PEP
ABBV
UNH
JNJ
XLE
CLR
VRTX
DG
IBM
MCK
Economic Calendar
