Not a great way to finish a month for the Bulls. S&P, NDX, DJIA all breaking support and falling 1%+ and Healthcare, Technology leading the underperformance while Materials, Financials and Energy are all lower by more than 1%. with all major sectors in the Red. Breadth is a shade more than 2/1 negative while Treasuries are amazingly resilient, as both TNX and German Bund yields are higher today, with stocks and bonds falling together. Transports are underperforming, down nearly 2%, and the Metals are spiking higher, with 2% gains in Gold and Silver as the Dollar's downward acceleration continues, nearing last August 2015 lows.
Overall, today's break in S&P was a definite short-term negative, but is difficult to draw the conclusion that the larger trend from February is now susceptible to being completely retraced. Most support lies down near early April lows near 2026-30, and should be a good floor to consider buying dips. Factors such as strong weekly breadth and momentum should be more important than the recent waning given the minor slowdown, and given how subdued Sentiment had been in recent weeks, this break likely should bring fear back to the forefront much more quickly than most would expect. Nonetheless, the break today IS a short-term negative and that's seen below- so 2026-30 area is what should materialize as max support which lies about 20 handles lower.
In the short run. meaning over the last 1-2 hours. equities have begun to stabilize a bit after the early selling, but we'd need to see a fairly robust move higher into the close to erase the negative effects of today's move and see S&P futures get back over 2071, which might be difficult.
One interesting thing to note for short-term traders- Various counter-trend buy signals using Hourly and 2-hour charts are now apparent using Demark's TD COMBO and TD SEQUENTIAL indicators, which if confirmed, would allow for an above-average bounce off these lows. For now, the only momentum that's oversold is hourly as Daily and weekly remain in neutral territory.- Technology and the NASDAQ are thought to be a key piece to this puzzle and given that the NASDAQ lead the market down, it will be important to see when the NAZ starts to stabilize and turn up- For now, Technology which has been this month's worst performing sector, down more than 2.25%, continues to lag badly while Semiconductor stocks (SEE SOX chart below, have jjust broken down)
SOX just dropped under support today after having been range-bound at the highs near Nov/Dec levels for the last month- This is at least a temporary negative for the Semis, so will be important to watch carefully so see if/when today's break can be recouped. Support lies near 634 then 619, but will be important for SOX to regain its 661 breakdown level and then turn back higher above 685 to help really jumpstart this rally
Finally, German Bund yields continue to be something to watch given the influence over our own Treasury market. The rise in Bund yields today given a 2% negative European market and S&P down near the lows is interesting. If bond yields start to move higher above March highs, this would certainly limit the amount of near-term technical damage in the stock market