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Futures staged an impressive reversal overnight from a low of 1320 to 1335. I will be continuing to watch how it acts around the 1340 level. A successful close above 1340 or could give us a nice bounce out of oversold conditions. A rejection at 1340 would indicate that sellers are still in control.

On a short term time frame, all long trades remain countertrend, so stops should be well managed. The risk off trade has been spectacular with volatility (VXX), the U.S. dollar (UUP) and bonds (TLT) surging. However, I remain of the notion that the market remains range bound, and now we are in the lower part of the range.

This chart of bonds vs stocks (SPY), since the beginning of this cyclical bull market in March 2009, is telling the same story.

(Click to enlarge)

Charts in Focus

(Click to enlarge)

Housing continues to be a lone bright spot as one of the few non defensive sectors making higher lows with the broader market making lower lows. For a new leg up, leadership will be required.

Overnight Action

  • Globex, High:1336.65 Low: 1320.95
  • DAX +0.22%
  • Spain -0.29%
  • China -2.52%

Market Moving Releases

  • Housing Starts, estimate: 680K
  • Capacity Utilization, estimate: 79%
  • Fed Minutes, 2PM

Earnings

  • Target Corp., (TGT), before market open, Estimate:1.01
  • Deere & Co. (DE), before market open, Estimate:2.53
  • CTrip.com (CTRP), after market, Estimate:0.29
  • Abercrombie & Fitch (ANF), before market, Estimate: 0.02
Source: Impressive Overnight Reversal For S&P 500