The S&P is back in the box again, we talked about this months back as the market chopped around within the confines of the box before it ultimately decided to breakout higher.
We are now at the bottom area of the box which is also the support area. That level is around the 1340 level. This level is on everyone’s screens and because of that it is important. If it fails this level, then look for 1300-1320, (maybe even 1275) to the downside. Conversely, this is 1340 area is support and could easily hold.
There was news over the weekend that China eased reserve requirements for their banks, so that is bullish. There was also some chatter out of Greece that they may honor the original bailout terms. Again this is “chatter”, and as we all know by now, nothing is to be believed from the other side of the pond. If it’s true though, this will also be good for the market.
Earnings are pretty much over and for that I’m glad because I hate trading during that period. Too much whip and chop for me.
The best acting sectors right now natural gas, utilities and big biotech.
IBB Big Biotech Names
Utilities
That’s a mixed bag which makes figuring out the next market move more difficult. The financials are currently wounded after the JPM fail, so that group could be difficult to trade over the short term. Regional names are still the safest in the financial sector.
So far buying the dip has worked and 1340 may prove to be a short term bottom for this tape, but I am seeing some technical weakness that I haven’t seen lately as it relates to the weekly charts. Some of the MACD readings are breaking down on the weekly time frames and that could lead to lower prices. It has before. You can see this in QQQ SPY SPX NDX RUT, DOW etc… The Russell 2000 also has a glaring head and shoulders pattern which may or may not validate.
As a result, I am sitting on my hands for a couple of days. I will also probably be in daytrade mode for a few days, so stop by the chat room if you are so inclined.
See you all in the morning.