Even though we have a short week coming off the holiday volume should resume as normal. Last week the market saw a quick drop on Monday taking it down to the lower trendline where it started to base before melting higher throughout the rest of the week. On Friday we found ourselves back at the upper trendline with a failed breakout above it. Right now now the market favors the the bears and will until the SPX breaks above 1354 taking us out of this down trend. Just because we break out of the down channel does not mean the bulls are back in control. The market could break out of the channel to consolidate before moving lower. Wait for a series of higher-highs before giving this market back to the bulls. With this market moving back and forth so rapidly breakout plays are becoming hard to hold for any length of time. The best plays are ones that move with the market. Look for stocks that are pulling back on support when the market pulls down to the lower trendline or stocks hitting resistance when the market is pushing against the upper trendline (like we are seeing right now).
Several charts really stand out to us right now. First, the big divergence in Bond Yields (TNX). Thursday was a major hit to TNX breaking it down below consolidation, major support at 30.98, and a close below the 200 day moving average. Friday confirmed this move lower so we will be on the watch for another leg down. Normally equities will follow bond yields down but as of right now we are not seeing that. Second, watching the NYSI, which we use as the reversal indicator, it has been chopping back and forth in a way we really haven't seen before. Right now we are looking at a continued down move.
The 10 Charts You Need To Know About.
Economic Reports due out this week:
Monday: Market closed
Tuesday: S&P Case-Shiller (800am CST) Consumer Confidence (900am CST)
Wednesday: Motor Vehicle Sales, ISM Mfg Index (900am CST) Construction Spending (900am CST)
Thursday: Jobless Claims (730am CST) Productivity and Costs (730am CST) Petroleum Status Report (1000am CST)
Friday: Employment Situation (730am CST) ISM Non-Mfg Index (900am CST)