WMT Warning Rattles Retail

Embrace the chop amid Fed, earnings.

Technical Edge — 

• NYSE Breadth: 65% Upside Volume

• NASDAQ Breadth: 45% Upside Volume 

• VIX: ~$24

Game Plan: S&P 500, SPY, Nasdaq, COST

Yesterday was a quintessential mid-summer session — it was full of mindless chop and it makes sense why. 

We have the end-of-month trade coming up (as funds reposition their allocations) and a huge week of earnings with AAPL, AMZN, GOOGL, META and MSFT all reporting, among many others. Then there’s also the Fed on Wednesday. 

All of this leads to hedging and increasing/decreasing exposures to protect institutional portfolios…and when they do that, you get sessions like the one we had yesterday. 

S&P 500 — ES 

We had an inside day on Monday, so any sort of range break through the high or through the low could create some follow-through. 

Keep in mind, WMT stock is down about 10% after cutting its guidance. It did that in May as well and the S&P did not react kindly at the time. How the ES reacts today could hold some clues (ie whether it’s able to shrug off bad news or if it’s still vulnerable). 

Daily-down below 3946 opens the door down to the 3920 area, a level we discussed yesterday. 

Daily-up over ~3989 opens the door to last week’s high, at ~4016. Above that and we can see some upside fuel. 

A Trade on the S&P 500 Futures

Yesterday’s buy-the-dip into the 3950s was a great trade and because it was so choppy, it triggered a few times. For today, I’m watching a different zone.