Market Overview

The Battle For the Bottom is Underway, Watching $ES_F 1338

Around the Globe

    Asia – CLOSED
  • Shanghai (China) -0.77%
  • Hang Seng (Hong Kong) +0.24%
  • Nikkei (Japan)+2.20%

Europe as of 6:05am EDT

  • DAX (Germany) -0.73%
  • FTSE (UK) -0.65%
  •  

Today's Economic News:

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Decent trade balance numbers out of Europe; we don't track the Italian numbers, but that was a nice one to note.   9:15am today we have the Industrial Production Numbers M/M.

 

Quote of the Day:
If at first you don't succeed, skydiving is not for you.
–Francis Roberts

Current Breadth Readings: (click here to see all our breadth charts)

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I thought we would take a rest from the Zweig.  That is always available in the full breadth post at http://redliontrader.com.   Today, we look at the number of stocks trading above their 40 day moving average.  It is the index my readers have dubbed the 40 DPI.   Way back in our hey-day, when the economy was growing and we had peace and stability, just two months ago, we were in the 80% number.    Reaching the 90% is possible, as we did in February this year.  Today we find ourselves at 17%!  Less than one out of five stocks are above their 40 day moving average.  That is a massive breadth move in just a little over two months.  What to do from here?  First pick the right stocks, find the babies sitting out on the lawn and pick them up, leave the bath water alone.  We will bounce and this number will come back up, but it may not be what your are holding.

 

ES SP500 Futures Comments:

Short: 1362
Long:  1338

Our 1346 area from yesterday held all day (twice) and all night.  We find ourselves just 1.75 above it as I type.   That is too close for comfort to make that reversal area of the day, so we have a touchpad at the 1338 area.   Should that break, it is a very bad day indeed.

On the up-side, the markets remain weak and it is hard to imagine with the geo-political and geo-financial uncertainties leading the headlines that we could muster a reversal.  We will at some point.  We think for today the market is capped in the 1362 area.  We do expect to see a rally at some point next week up to near the 1380 area.

The battle for the bottom has just begun. Volatility and pace will be fast and furious over the next couple of weeks.

 

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US Dollar DX Futures Comments:

We need to watch this dollar closely.  It is poising to breakout.  We don't think it will, but if Europe and the Euro sell off today, be careful.

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TLT Twenty Year Bond ETF Comments:

We think the corner has turned here today on the TLT and we should see some downward movement today and into early Monday.   The one caveat to that is fear going into the weekend with a deteriorating Middle-East situation.  If risk gets taken off, we should see it in Gold and TLT.

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