The market declined once again on Monday, but it recovered off the opening lows to finish even on the day.
Last week we speculated on a down Monday, but a quick recovery back up to 1085 support. The market made its way back to 1085 after a negative open, but it could not get above 1085 by the close. Sellers continued to dominate momentum, but the bears are weakening. Today, the bulls had a falling dollar on their side. Also, advancers beat out decliners by about 2 to 1. The bullish reversal was diminished by low volume and the lack of a late day rally.
The biggest day of the week is Tuesday. The market will have to absorb housing stats, PPI, industrial production and capacity utilization before the trading begins. There is plenty of room left to the upside, and very little room left to the downside. We have trades setup based on the reaction of the market tomorrow, but we lean towards a positive start. Bonds made a fresh high today, which does not bode well for the bulls. Additionally, copper trades at $3.26 - our must hold bullish support.
Our watch list was higher today.