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S&P has undercut overnight 2806.50 lows which is a negative for Futures- Mid-day Thoughts

Into mid-day. Markets are growing more negative as S&P has just taken out the overnight lows in the last 20 mins, which is a negative.  And while intra-day momentum is showing divergence..  On a close under 2806.50 allows for a more meaningful pullback to get underway.

Breadth has been POSITIVE today thus far..but has gotten more FLAT into mid-day .  Most of this selling has been NASDAQ and Technology related, but hasn’t really affected other sectors too meaningfully just yet, but slowly but surely we’re seeing signs of other sectors turning negative-  Financials are now flat and 8 sectors lower.. only 3 positive.   Energy, Mats and  Telecom. 

Yields have pulled back from earlier highs while the Dollar has begun to gain ground on the downside today, losing -0.40%.  This BOJ meeting approaching and hopes for signs of the end of easing are really the only thing keeping Stocks from staging a larger pullback and have helped yields early on.  But this now seems to be fading

Technology is down nearly 2% on the day, while Discretionary is also lower by 0.60%+, while Energy is positive with near 2% gains in both XOP and OIH, while XLE is up a milder 0.54%

 

Overall, its right to be defensive UNDER 2806.50. favoring Staples.. Utilities.. while not rushing to buy Technology/FANG, and/or Industrials

Aggressive traders can be short under 2806.50 with initial targets down at 2789-90

 

S&P getting under 2806.50 is a negative.. This breaks the flat trend from early July

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S&P getting under last Friday’s lows on a close would point to a move down to 2789, and under this leads to 2736, then 2684-6.

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XBI breaking trendline support from April, and a test and break of early July lows looks likely

DRG- Pharmas acting much better near-term as might be expected, then Biotech as stocks lose ground and Pharma would be favored.

XBI below likely will reach 90

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SOX steadily weakening after INTC’s drop last Friday.  We see key areas for SOX near 1328- UNDER this leads down to at least a retest of early July, but likely lower under 1250

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