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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 (NYSEARCA:VXX), the U.S. dollar (NYSEARCA:UUP) and bonds (NYSEARCA: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 (NYSEARCA: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., (NYSE:TGT), before market open, Estimate:1.01
  • Deere & Co. (NYSE:DE), before market open, Estimate:2.53
  • CTrip.com (NASDAQ:CTRP), after market, Estimate:0.29
  • Abercrombie & Fitch (NYSE:ANF), before market, Estimate: 0.02
Source: Impressive Overnight Reversal For S&P 500