The Bulls Have Lost Their Footing.

Can they regain it going into September?

Technical Edge — 

• NYSE Breadth: 18% Upside Volume (!)

• NASDAQ Breadth: 29% Upside Volume 

• VIX: ~$26.25

Game Plan: S&P, Nasdaq, Individual Stocks 

The action lately has not been very promising for the bulls. Every rally is being sold and each up-move is getting erased. The S&P 500 has now fallen in three straight sessions, shedding 252 or 6% in that span. 

Given the performance, we’re likely due for some kind of bounce — but how strong will it be? 

Lately, the pattern has been to sell the 40 and 50 point rallies. We rallied about 53 points from yesterday’s low to the overnight high and have since seen a 40 point dip (again, all during Globex). 

We’ll get into the specific levels in a minute, but generally speaking, the market appears to be at a make-or-break spot. If the S&P can’t hold this 4,000 area, we could be looking at a much bigger dip as we get into the more volatile months of September and October. 

The Fed not only doesn’t have our back but it’s an active headwind at the moment too. That has to factor into investors’ minds at some point.

S&P 500 — ES

The ES puked right out of the gate yesterday, losing 4000 in the opening hour and then was rejected by this level. Also notice the way it was rejected in back-to-back sessions by the 10-week moving average. 

There are some disturbing developments on the charts in this regard. However, 3980 to 4000 is key. 

There we have the 50-day moving average, 50% retracement and the anchored VWAP to the 2022 low. Again — this zone is key. 

On a rebound, we have to see how the 4060 to 4070 zone is handled. That’s been resistance for the last two days and is the underside of the 10-week. If we push through it, the 4090 to 4120 zone is in play. For now, I expect this area to be resistance. 

On the downside, a break of yesterday’s low at 3964.50 and failure to reclaim it really puts the bulls in a tough spot. 

SPY