History doesn’t repeat but it rhymes, we are told, whatever that may mean. The stock market is not history and it does repeat… incessantly. It did it again yesterday, like a movie you’ve seen before, but perhaps with a different ending.
On Monday the S&P500 mini-futures (ES) made a down-and-up move that looked a lot like last Wednesday: down from the overnight high into the open, then back up to a higher close on low volume, another miraculous recovery unsupported by reality.
The futures closed at 2099.25, just a hair below the important 2100 level, and 9.75 points higher than Friday’s close.
The early decline was a reaction to the Empire State Manufacturing report, which was bloody awful. The rebound was nominally due to upbeat but suspicious housing stats. The realtors’ association says positive “sentiment” is increasing. What isn’t increasing is stuff that might actually contribute to a boost in housing, like lumber sales and genuine home sales, both of which declined.
But none of that matters. The Street’s major interest this week is the Fed. Traders are starting to believe the Fed will not – and maybe cannot — hike interest rates in September. Party on, dude!
Today
The Fed Open Market Committee minutes will be released Wednesday. They are unlikely to say anything unexpected, but there will be the usual parsing of the semi-colons. The market is not likely to do anything much before they are released, but watch for unfounded rumors trying to move the price around.
The ES is likely to hold at or near the current level to form a base for an attempt to move higher. 2085-86 is today’s support zone. There may be a small retracement to 2093.50-90.50 area for testing, but as long as 2085-86 holds up, traders need to continue focusing on the buying side.
The major support levels for Tuesday: 2054-55, 2035-32, 2025-23.50, 2018.50-16.50;
the major resistance levels: 2128.50-29.50, 2134.50-36.50
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