Good morning. Happy Monday. Hope you had a nice weekend.
The market is coming off its first across-the-board down week since early March. It’s been a heck of a run. Whether last week’s weakness is the beginning of an extended move down or the beginning of a pullback within an intermediate term uptrend won’t be known until after the fact. Our job is to play the odds and let the chips fall where they may, and early last week it was obvious staying long wasn’t wise.
Futures were down soon after opening for trading last night but are now up; if they hold their current levels, we’ll get a nice gap up at today’s open.
A gap up within a downtrend (yes last week’s action constitutes a short term downtrend) is typically shortable immediately or within 30 min of the open. We’ll see.
I can’t stress enough that you can’t trade based on what’s supposed to happen or should happen. You gotta trade based on what is happening. The government is playing a much larger role right now than is normal so the unexpected is happening (many banks should have gone belly-up but instead their stocks tripled and quadrupled, so don’t argue with the movement).
As pointed out over the weekend, the divergence between the Nasdaq and Russell (they led on the way up and are now leading the way down) and the S&P and Dow needs to be resolved. The Nas and Russell have broken support and are in the bottom half of their Bollinger Bands…the S&P and Dow have held support and are still in the top half of their Bollinger Bands. Something has to give. The charts are below.
If the S&P closes below 875, I’ll be looking for a move to the lower BB which is currently around 827.
headlines at Yahoo Finance
stocks to watch MarketWatch
today’s upgrades/downgrades
yesterday’s leaders & laggards
this week’s earnings & economic releases