After very weak trading overnight that broke the multiday trading range and the lows from 8/11-8/12, we've seen a bounce in the S&P 500 (ES) futures and are now trading back above those lows (i.e., back into the multi-day range). A similar pattern is evident in the NASDAQ 100 (NQ) futures. If we can hold the overnight lows, a snap back rally trapping shorts is a distinct possibility, particularly given the historical patterns around weak opens noted in the prior post.
Oil is also trading off its lows this morning, and the U.S. dollar is off its highs vs. euro. I'll be watching those correlated markets to see if risk assets can catch a bid today from bargain hunters.
That having been said, we've seen an extended period of topping from late July and those do not typically terminate in one-day declines. A break of the overnight lows would represent fresh selling pressure and a confirmation of a transition from a topping market to a short-term downtrend. I'll be tracking markets via Twitter this morning (follow here) to gauge acceptance or rejection of value at these lower price levels.
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5 comments:
I think much of the sell off can be attributed to expiration this week. There has been a distinct pattern of market trading against the prevailing trend during the expiration week.
right vinaydh, but as i remember past opex week has a positive effect on mkt.
btw, also note macd daily cross on SPX adding to bearish bias.
'd like to add, while trading ES i always monitoring NQ, plus ER - Russell futures.
right meques, but that was Whitney induced positive effect. She upgraded some financial stocks back then.
Conspicuously low Bids/Offers being shown in Level II, though order flow is large. Furthermore, $TICK are not producing extreme readings like breadth.
Not saying we'll get a reversal but rather pointing out some divergence within internals.
Shanghai has given up 50% of its gains for 2009 over the past 2 weeks.
Insiders selling / buying at 20:1 or more.
And the macro environment is horrific, I think we can count on leveraged consumer buying on credit cards as being finished for a generation. . .
All worthwhile tells that this rally is in big trouble. . .
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