David Chojnacki S1F Market Technician
We opened the week following through on the weakness at the end of the prior week. After being down nearly 1% on the session, the indices found support at an interim technical level and reversed to finish to the upside. Volume was below average and breadth was just slightly negative. We continued below 1175 on the S&P keeping us in a downward bias. Mixed near term technical signals continue, as we continue the consolidation pattern. RSI’s for the DJIA and S&P are in the low 40’s. The Nasdaq100 exhibits a little more strength with an RSI of 49. The Nasdaq100 also closed above its 20D-SMA, while the DJIA and S&P remain below. The consolidation continues in a range for the S&P roughly between 1120 and 1225. This is a fairly wide range of 9% and
recent sessions indicate that there may be some narrowing. It is a tradable range and may be a worthwhile strategy until we emerge from this consolidation. Volatility remains high which presents the opportunity of moving through this range rather rapidly. Technical indicators are mixed as to what direction we take when we come out of this consolidation. The VIX in yesterday’s session was as high as 42.56 at one point before closing nearly unchanged at 38.5. Futures this morning are lower versus fair value but have been improving. The DJIA and S&P developed a ‘hammer’ in yesterday’s session, suggesting some additional upside today. We have a heavy week of economic reports and options expiring this week.
Major Economic Reports TodayExport/Import Prices-8:30am Treasury Budget-2:00pm
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