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Bounce looks underway, but not likely to be straight up

S&P futures showing sharp 1% gains on the heels of last week’s 5% decline, but last Friday’s surge into and after the finish has now followed through.  While an oversold rally could happen this week, it’s likely not going to be straight up given the sharp downward momentum now, so a trading environment still makes sense and heightened volatility.  Europe rebounding with commodity and Banks leading, while Asia mixed as Japan is closed.  Yields largely higher around the globe today, with Bund, Gilt, US yields higher while the Dollar has stalled out a bit over last couple  days.  Pullbacks UNDER 90 would allow for retest of 88 and likely coincide with a bigger bounce in the metals.  WTI crude higher by 1.8% even with OPEC upgrading supply forecasts.  Grains starting to show more upward progress.    For today, S&P has resistance right at 2645-8 which has held for the last few hours..   Above 2655 would allow for further bounce to 2661, but should be strong resistance near 2700-  UNDER 2618 drops down to PIVOT at 2595 and then first meaningful trading support near 2553.   Friday’s lows 2530 will be very important to hold over next couple days on any pullback.   For today.  Trend negative but bounce likely this week,. And futures quite stretched this am and well over Fair value

Premkt gainers in AMBR, CSRA, CDLX, HGSH, EMAN, ICON, COLL, TEUM, ELY, RIOT, NXTD, CRSP, DRYS, PIRS, RNN, ROKU.  On downside-  LJPC, SPNS, AXON, DY, LL, SMI, WKHS.  Let me know if you have questions

 

Some signs of positive divergence emerging-

Insufficient price action thus far to consider this pullback to have completely run its course, but we have seen some DIVERGENCE in Futures holding up above Monday’s lows while SPX cash was below.   Retests like we’ve seen typically do offer less selling pressure than the initial drop, and this time is no different, and fewer stocks hitting new 52-week lows as we saw back on Monday..  so this is at least a minor positive, but 240 min charts have not yet given Buy signals on this decline and still warrant one final pullback to new lows.   Yields have begun to escalate this morning and S&P Futures have made at least minor progress in turning higher.. but this is a drop in the bucket as to what’s happened on the downside..  and could easily be erased.. so pays not to be too aggressive here until more proof of S&P washing out to new lows..  and/or more credible evidence of stabilization.  US Dollar index seems to be at levels where this can hold and turn back lower.  FOR S&P.   2580 is very important as support, breaks of which should lead down to 2529 and a minor new low-   2617 is resistance… and PIVOT today at 2619.. so getting above this can allow for a minor bounce to potentially 2645..  But tough to make much of this pattern even on hourly charts as being all that bullish and a final pullback seems likely.  Gainers in early trading in MTO, NVDA, VRSN, AIG, AEE, UAA, GPS, MCO  while on downside-  VIAB, UPS, CHK, DISCA, CMG.  

 

Tough to make too much of bounce just yet

Equities got all the way down to 2613 in S&P Futures before bouncing, but we’re still seeing breadth of 5/1 negative.. and volume is not as tilted to the downside.. so to argue a low is at hand, it should be good to see that capitulation in volume like what happened on Monday when TRIN got to 3.60 and fewer stocks hitting new lows. Overall, it’s tough to make too much of this bounce in the last half hour and S&P would need to get back over 2687, the highs from earlier.   Yields have pressed higher again, while the USD has stalled out on its gains and now flat on the day.  Precious metals higher on the day but will need rates to stall out and turn down to have a bigger rally.   At present, we see Industrials and Financials down over 2%, and only Utilities positive, but still no real signs of fear.    Fear important in putting in lows, and tough to see meaningful bounce when many haven’t capitulated and started to buy puts.

 

Pullbacks have support at ES-2613 for the balance of the day.   But under that would allow for either 2701.. or under would bring about a retest of Mondays lows.

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Yields surging, US futures clawing back, but well below fair value

Premkt minor gains in Futures though still below fair value, and US equities are set to open flat to slightly lower given last nights late plunge.  So S&P futures are now UP 30 handles from levels hit post close yesterday, but yet still implied opens will show slightly lower prices at the open-  Most of Europe down 1% while Asia is mixed.  The big news revolves around bond yields continuing their recent ascent, with US 10yr yields set to open near prior highs and at current levels would close at the highest levels since early 2014 and just striking distance below those highs at 3.05%.  Getting over 3.05% would indeed break the 30year downtrend and be very important to suggesting yields should begin a long-term trend higher (which for now is premature)   Combination of yield and Dollar gains has been hurtful to the Metals and this doesn’t look to change just yet, so a bit more weakness in this area likely into early next week.   Overall, it seems like yesterday’s late pullback was telling and could result in a deeper retracement to our recent Tuesday gains, as breadth and price action proved tepid after this bounce.    Given that stocks and bonds both have been correlating pretty positively of late, further bond declines to take yields back to new highs likely wouldn’t result in equities rallying.  But the next few days will be key in this regard.   Support for S&P is at 2618-22 and then 2604.  Provided S&P remains above 2604, the retracement rally can continue.  UNDER 2604 is problematic and should lead to an immediate retest

 

TODAY AT 1pm EST-   Dial in and join. We’ll be covering global assets and sector rotation

 

Roller coaster Futures ride sends S&P up 100 from last nights plunge

US Equity futures remain well off lows made late last night when S&P hit 2529, and rallied about 100 points into Europe’s open before giving back about 60 handles in the last few hours as the DOUBLE DIP appears to be happening.   Treasuries are selling off, the Dollar is strengthening,  Crude is lower down to 63.30 while Gold is fractionally higher. 

Overall, given the near-term oversold conditions now present on intra-day and daily charts as part of the intermediate-term uptrend, and some sudden ramp up in concern with VIX going up 100% yesterday while Equity put/call is gradually rising,  we should be close to at least tradable lows.   We saw the FIRST instance of a huge imbalance in Downside volume yesterday with TRIN readings at 3.6, and important to watch for signs of divergences in New lows and improvement in advance decline over the next few days, which seems likely as the Percentage of stocks above their 10 day MA is down to 1.39% on SPX as of last night, while the percentage above their 50day is now at 27.8% just above 25%.   Given that the fundamental picture hasn’t really changed, nor the intermediate-term technical picture.. and most of this has been volatility related.  Markets should be close to bottoming in the next 2-3 days.   Technically speaking it looks right to cover shorts and assume longs at 2550 down to 2500

Indices higher, yet breadth tilted negative, with More Declining issues

2 hours left. We see S&P still up 0.70%.. But Decliners are outweighing advancing issues.  Breadth is actually DOWN on this rally today.   Volume is spread around 2/1 positive which is giving the ARMS index a reading of .48. Very low.   Sectorwise, Tech regaining some of the decline in the last couple days, while the surge in Healthcare continues.  Only Utilities and Real estate are down.. But Utilities are outpacing Technology for the week.. At +1.69% vs 1.56% for Tech.. And Telecom has been this week's top performer-   The dollar's decline continuing today.. While yields have been scaling back higher.. So a move to 2.68-2.70% looks likely for 10yr yields and that could coincide with a yield peak as well as Stock peak early next week..  For now..  The key takeways are that this week's Transport and SOX declines should be tough to regain in just 1 day as these both broke important uptrends.  Breadth is now slumping and something to take seriously.   VIX meanwhile , down only 2%.. A far cry from normal times when a 0.75-1% rally would bring a huge decline in VIX.. So today holding up very very well-  OVerall today's stats paint a far less rosy picture than one would guess by just looking at price alone

The Times.. they are a Chan-gin..

Definite signs of things changing in the market..  we’ve seen two straight days of reversal attempts now.  Yesterday held up and went higher. While today thus far is well off earlier highs, with big earnings stocks like CAT getting down below key support which if closes here.. would be a negative for this stock.    Sector-wise.  Consumer Staples outperformed last week, while this week, Real estate, Telecom and Staples yet again are outperforming, with technical signs of Utilities starting to stabilize and not moving back lower, despite rates moving up.     Technology and Industrials meanwhile have begun to pullback.. with breakdowns in the Transports and Bullish sentiment has begun to approach levels seen near the prior peaks in 07 and 00 and after years of bearishness.. the ebullience now seems very different than the last couple years..  Whether this is just the BEGINNING of the move from bearishness to bullishness seems doubtful, but the momentum surge has indeed been powerful and its been a difficult trend to try to fight.   However, breadth during this recent surge in January has been lackluster and implied volatility has held up quite well.   The VIX has been coiling and technically looks constructive to think a big move is approaching.   A couple of different cycles suggest some kind of change of trend could occur in stocks between now and 1/29,  but it’s been tough to pound the table on this given how bullish the trend has been.  So we’ll need to see the actual reversal itself, and for now that requires a move down under 2825.  Meanwhile the Euro continuing to press higher vs the US Dollar while rates have begun to tick up and press up to new highs.    Demark wise.  The S&P and Treasury yields are close to signaling at least daily signs of exhaustion.  So we’ll see if yields get to 2.70 and reverse back lower  and whether this recent weakness in Semis and Industrials persists..  But this kind of movement after a big uptrend is generally a worrisome sign given how hugely bullish the public is.. and many have difficulty finding reasons why one wouldn’t be in stocks.. given better than expected earnings, Fed rate hikes growing nearly to be a certainty in March, geopolitical risks having died down.. while most of DAVOS has sounded very very optimistic.  So no obvious roadblocks to further gains.. which is precisely the time to pay attention.  For now.  Trends intact.  But watching carefully. 

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Reversal could have importance given Sentiment, cycles, Counter-trend Sells

Just past 2....  S&P has erased all its early gains, and now Negative along with NASDAQ while Russell , and TRAN have turned down on the day.  Breadth is flat to small negative. with about 3/2 volume into Declining vs Advancing issues.   Real estate making a big comeback today.. While Healthare and Staples also positive by nearly 0.50.. But the decline in Energy, Industrials, and Materials has served as a headwind for markets, and only 3 positive sectors now out of 11..-  As mentioned, there is a heightened chance of market trying to peak out this week.  a rare confluence of some countertrend sells among various sectors and indices and S&P in particular has a sweet spot of resistance just above 2800 which initially looks to have worked.  -  US 2yr yields have pressed up over 2.01% today. While 10yr has also rebounded from earlier decline in yields.. Bund yield still lingering at .56 bps.. Down .02bps on the day-  The Decline in the dollar continues to have positive implictaion for the metals and metals stocks and GDX is higher, and still looks to extend-  Overall, a down close would be interesting and different than what we've been seeing in recent weeks, so given the combination of a few bearish indications for a possible peak, it's necessary for the bulls to forge ahead and close back at the highs , as a negative close would be more negative heading into the balance of this week-  Note, relative charts for Staples have tried to bottom out. And this looks to be an area to favor in the short run..   While avoiding the Discretionary, Financials, Tech areas- at this point.  2790 has been breached.. So last Friday's lows of 2766 will have importance

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Upside seems limited this week in Equities

Early am gains in Europe along with solid earnings out of C, UNH have propelled US futures higher yet again,, with prices now at the upper border of resistance from 2800 stretching up to a max near 2815.  Bonds are fractionally higher on the long end (2 yr yields holding up. So Yield curve flattening)  while not much volatility in either WTI crude, nor Gold.  Bitcoin this am is down over 2k, UNDER 12k, or down 15%


Europe making a bullish move above former highs, but should be noted, this still hasn’t gotten above last November highs, nor last May.. so this still has quite a bit of work to do to join the strength seen in US.  As I wrote in my Weekly Technical Perspective this am.  My thinking is that a turn in stocks back lower should happen this week or next week.. with the potential of the next few days.. so I view the risk/reward as poor in the short run.. based on a combination of Cycles, sentiment and Demark exhaustion which is now present among several different indices and many sectors as of this week.   After having been bullish for the last couple months, it looks like prices are at levels where its right to consider paring back longs, taking at least partial profits and/or hedging gains.  Markets are clearly in a parabolic phase, and momentum has been strong, despite breadth coming in weaker than expected on this surge from late Dec.  So important to watch markets carefully as indices are capable and likely of erasing gains equially as quickly, if not more quickly than they occurred, when this starts to turn lower.   But for S&P, the areas specifically from 2800-9 looks significant.    

As for areas on the downside if when breached , would turn near-term trends negative. The first area lies near yesterday’s electronic session lows near 2790.   Breaking this would violate the 5 day trading) trend, which in of itself has seen prices advance more than 40 S&P points.   Look to sell into 2805 and above near 2809-11
Premkt gainers:  HAEK, CATS, SRNE, OSIS, OCUL, DNR, MRK, LVS, GM, CRC, WYNN, FCEL, C, PLUG, MGM, while on the downside-   EIGR, DPW, KODK, GROW, RIOT, LFIN, CNET, TEUM, OSTK, TSRO, GE, FNSR, VIAB, MGI.  Let me know if you have any questions

NAZ looks to have a date with 6500-25, then stall out

90 mins to go.  NASDAQ 100 push back to new highs looks to extend up to 6500 but lots of resistance there on Monday-Tuesdsay of next week and that would be an area to take profits while 6975-7000 is key for NASDAQ Comp-   Dollar has snapped back and just minor gains now in both WTI and Gold.   Breadth coming in nearly 3/1 positive and 6 sectors now UP more than 1%..  Healthcare, Tech, Financials, Staples, Telecomm and Industrials.. While all 11 sectors higher-   Seeing a snapback to multi-day highs in Semis.. Which is a positive.. Along with financials leading all other sectors.. Yields still very range-bound, but the yield curve has flattened out pretty dramatically again with 2s/10s making lowest close since 2008 and now at 51 bps.. So both 2 and 5 yr yields continue to rise pretty rapidly and quicker than back end-   OVerall a move up to 2700 definitely looks possible into early to mid next week and at new all-time highs, not much resistance in the short run

 

 

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S&P Held where it needed to.. Now can push back to new highs

Quad witching for December upon us, S&P futures up fractionally while most of Europe is down and most of Asia also lower.. Not much movement in either Treasuries nor US Dollar index while the precious metals are higher along with WTI Crude.  Important to note the following-  S&P held where it needed to last night, and has rebounded, while most of Europe remains far weaker-  The key will be the ability of Financials and Technology to stabilize and turn higher, both which have begun to lag lately-  US Dollar index will close lower this week while most of the Metals are headed higher, and likely to trend up through the balance of December- Bitcoin meanwhile has pushed back to new highs, up another 8% to near 18k, and Futures are at 18450, higher by 10% or 1650-   Areas of importnace today for S&P 2669, and then 2675-7, while on downside 2651 becomes the new stop for trading longs- Premkt movers - HIGHER-  ADBE, COST, OSTK, UAA, UA, UEPS, ALSK, GROW, RIOT, CROX, JBL, DRYS, FRO ..  And LOWER- CSX, ORCL, OHTI,FTR, UNP, TOT-  Let me know if you have any questions

Gap higher given Tax bill passing keeps near-term trend higher

gm - Sun eve Gap higher in Futures given Senate Tax bill pass still near levels hit last night around 6pm, a few ticks down from highs, but up 0.50% while DJIA futs up over 1%, and NASDAQ up relatively less at 0.37%.  Europe up over 1%, both Crude and Gold down fractionallly and bonds also showing mild losses, with TNX up to 2.388.. Overall while quite overbought, and showing signs of rampant Call buying and Demark Sell Setups while Technology has been waning, the broadening out of this rally has been a positive of late, with breadth and momentum improvement- Trend will be bullish until we see at least some evidence of prices turning down to multi-day lows-   CVS/AET deal valued at 69 billion one of the more discussed topics  this am, and early gainers in AET, SQ, OSTK, CIEN, RIOT, BGC, ZYNE, PXS, MARA while on downside-  NOK, AU, FNSR, SIG, SRAX-   -  Resistance for this am at 2661, then 2670-5, while PIVOT at 2633 today and then support way down at 2615

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Market regains some of early losses, but concerns, & uncertainty remains

Market having recovered 0.50% is a partial positive and we'll see the extent to which this can continue into the close.  Tech weakness along with the bond rally however remain negatives.  -   Breadth has recovered, but still a minor negative and industrials, Tech and Materials still down over 0.75%.. but we've seen Financials turn back positive after being down 1%.  and Telecom, Discretionary along with Energy  being positive.   Crude and Gold have given back some of early gains.. but Crude still higher above 58, up 1.25%.   OVerall,  S&P will need to regain 2650 to have conviction that this has played out.  and for now, this volatility still looks like something which could persist into early December

 

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Flynn developments cast uncertainty, & Equities turn lower

Into mid-day, we’ve seen a real rollercoaster, with Initial 1 to 1.5% declines in Equities now being recouped to a minor extent..   NASDAQ still lower by more than 1%.. and Bonds have rallied globally, with yields reversing much of the rally in the last few days, casting doubt on the breakout.   Gold had spiked over 1% which is now fading a bit, and now up 0.80%, higher by 10..  while CRUDE oil is up by nearly 2%.. up to 58.47

Sector-wise, we’re still seeing 3 sectors down more than 1% today..  Industrials, Technology, and Materials, while Financials WERE down more than 1% and have rallied a bit in the last 30 mins..

 

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Technology decline a likely headwind for Equities in early December

Last day of the week but the first day of December.  Trend bullish but stretched and upside should prove limited into early next week before at least a minor pullback-   For today- Minor losses in both US futures and in most of Europe while Asia has been largely mixed today- Bond yields have pulled back a bit after recent breakout, but little overall volatlity in WTI, nor Gold and Dollar higher just fractionally-  Markit Manufacturing PMI data due out at 945 and additional ISM data out at 10-   Overall, Trend has reached levels where further upside might prove difficult given combination of low Put/call data, Demark 9-13-9 patterns while both Financials and industrials have gotten stretched while Technology looks to be turning lower, down 5% on the week-  Resistance today near yesterday's highs 2658-9, then 2663-4, while on downside, overnight lows at 2631 should be important, then 2627-  Premkt gainers in FMI, SRAX, PLUG, NTNX, AMPE, SSC, AMBA, GROW, while on downside-  GCO, ULTA, LLNW, ZUMZ, GST, BIG, RAD, lower-   Let me know if you have any questions

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Breadth Negative as Stocks hitting new highs- Warning

30 min left.   S&P, DJIA and NASDAQ all at highs but NYSE breadth remains negative, More Declining than advancing stocks while Volume also heavier in DOWN vs UP stocks, which is extremely rare-  Healthcare, tech, Utilities, energy positive, while Financials, Telecom, Real estate, Industrials and Materials all down on the day-   Dollar moving back to highs of the week after the last few days of DXY consolidation, and EURO looks vulnerable to selloffs down to 1.14 vs USD-  Crude has spiked to levels that also are important in terms of resistance and a good spot for profit-taking, Technically after this recent rise.   Gold still negative and TY yields are down to 2.3346, suggesting additional downside next week, while 2s/10s curve has broken down to the lowest levels since 2007, undercutting 2016 lows in its flattening, which makes sense for this stage of the cycle-  Former Chip leaders INTC and NVDA both giving some indication of trying to peak out in the near-term and might serve as the catalyst for SOX to fall next week, leading Technology lower, as Financials follows the yield curve which has been steadily flattening-  Overall, trend in Stocks positive, but one should look into selling into this as stocks hit the 1-year anniversary of last year's lows, which this time around, have the potential to make a HIGH- Expect stocks peak out towards the half-way point of their 20-week cycle which has been dominant over the last couple years and should head down into mid-January 2018.  AAPL nearing its own cyclical peak based on relationships that have worked with this stock since 2015-   Have a nice weekend

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Treasury rise could prove problematic for Equities as Financials fall

Aead of this am's Jobs report.. 313k exptd... US Futures have rallied back from early losses.. while NASDAQ maintains above avg gains w/AAPL having beat handily last night-   Most of Europe mixed.  outside of Spain down by 1.4%.. and Asia largley positive (Japan closed)-   Not much volatilty this am in either WTI nor Gold and Dollar, TY also largely unchanged ahead of 830-  yields have steadily pulled back in recent days, so we'll see if today's report results in any acceleration or trend reversal-  Key developments in recent days include Financials jumping to multi-day highs.  most of Industrials bouncing yesterday as Aerospace/Defense makes a sharp relative gain along with many Rails  while Airlines still a big laggard and dropping to multi-day lows-   AAPL's gains causing premkt lift up to 174 so the early bias will be positive given both Tech gains and Financials.. but key resistance lies at 2585 and then 2590-2 with move back down UNDER 2560 needed for bearish stance-   Gainers today in ANET, SMI, S, ATVI, NTLA, JACK while on downside-  P, PACB, DATA, IMGN, AIG, RLGY, SAN, CBL

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VIX and SPX trending in similar direction is odd and likely soon reversed

Eco data beat across the board this am with Durable goods, Cap goods orders well above expectations-  bond yields have been trending sharply higher all morning with TNX back up over 2.40% and now at 2.45 which will give a lift again to Financials this am.  Both Gold and Oil mildly lower-  Overall Equity prices have gotten stretched up to the highs of the range and notable that Advance/decline has been trending lower in the last two weeks, while VIX has been moving HIGHER along with equities over the last few days, a very strange occurence that rarely occurs all that often.  the last times that came close (4 out of 5 days where VIX and SPX both trended higher in unison) were in Spring of 1999, November 2013 and then August of this year, each of which were followed by at least a minor dip--  Overall, today's minor Futures pullback not changing things too dramatically and will need a close under 2560 to have any sort of confidence of a larger correction- Key areas on upside at 2570-1, and 2558-60 on downside  -  Premkt movers for today-  QTNT, CAPR, VSAR, AKAM, OSTK, TYME, IRBT, WLL, NM, LL, NOC, GPRO, S, While on downside SVRA, CMG, AMD, SALT, EW, PFLT, QURE, DFS, and T-- Let me know if you have any questions

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Move to new Multi-day lows looks important as trend broken from late August

Little more than an hour into trading, we've seen a move by many indices and sectors to new multi-day lows-  SP Futures being under 2560 WILL confirm counter-trend sells and break the trend from late August...  Declines are swamping Advancing issues by nearly 5/1 to the downside, a similar ratio to VOLUME.   10 of 11 sectors are down with only Tech holding on just fractionally.  But Industrials, Staples, Financials, Discretionary, Utilities , Telecom, Real estate all down by more than 0.50%.. Far WORSE than any of the good days we've seen over the past few weeks and volume and breadth much more negative than any of the positive days in October.  No real 4 or 5/1 positive days in some time.. And breadth has been slowly trending lower as has been noted.  VIX up 5.5% thus far-  Yields have backed off early highs-  Might be a bit early to say today confirms a peak is in.. Given its early.  But a close here certainly would be a negative. So for the Bears. Important to hold early losses. But momentum clearly starting to rollover as was noted by MACD crossing over to negative a few days ago and Advance/Decline peaking out on the 11th of October while VIX rose for the last 4 of 5 days- Stay tuned

 

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DJIA gains being led by 3 stocks, CAT, MMM and BA, while 11 Dow stocks down

Just past Mid-day, markets continuing to show just mild gains-  Breadth is very flat, slightly favoring Advancing over Declining issues .. Most of the attention is being paid to the DJIA which is higher by 0.81%, yet 11 stocks are down of the Dow 30 and 3 stocks, MMM, CAT, BA are making up all the gains.  Financials, along with Industrials and Materials are the 3 sectors making up most of the gains, higher than +0.50%, while Healthcare, Staples, Utilities, Telecom and Real estate are all negative-  Yields continue to hug former highs near 2.40%.  the two things worth pointing out that are a bit different than the DJIA gains might lead investors to see this market concerns both the VIX breakout yesterday.. and also the Advance/Decline which turned down last week and hit the lowest levels since early October -  Overall, 3M, GLW, CAT, SWK, CF all higher by 3%, while on the downside- WHR, PCAR, IPG, CNC, WWG, BIIB all lower by 4% or more-  We'll need to see more signs of broadbased participation to have more confidence at this stage, but breadth and momentum definitely seem to be slowing of late while implied volatlity has jumped, so its important to keep a close eye on 2560-  Let me know if you have any questions

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