Stocks Look Tired, But Indices Continue Climb

Can we rotate up to last week's highs?

Technical Edge — 

• NYSE Breadth: 33% Upside Volume

• Advance/Decline: 32% Advance 

• VIX: ~$19.25

Is the S&P climbing a wall of worry? Seemingly nothing the Fed says at this point is enough to knock the index down. That’s as the bond market and Fed Funds Futures continue to price in a rate cut by year-end. 

The CPI report next week should shed some light on the Fed’s next action. Until then, the index continues to grind. 

We have a gap-up today, but I am just a tad skeptical, as many tech names looked quite tired yesterday (NVDA, MSFT, GOOGL, etc.) Gap-ups above the highs and failure to hold them creates a bit of a “risk-off” trade for active traders. 

S&P 500 — ES 

We got a strong response off the 4150 level right after the 9:30 open, trading 4149.75 then bouncing almost 20 handles. Then the S&P settled into a day of two-way action where traders had to be in-and-out of positions to make it worthwhile. 

As for today, look at the way the ES continues to pennant under the 4175-4180 area. A clean breakout over this area opens the door up to 4208. A weekly-up close today over this level potentially opens the door up to 4300+

Wednesday was an “inside day” so a break of the range could trigger a rotation. 

Reversal Trade? Coming into the session hot, I don’t know if we’ll see yesterday’s low of 4121. If we do, look for that reversal trade. That’s where the ES breaks the low, tags the 10-day and reclaims the low. 

SPY