Thursday closed the day red across the broader markets, the Nas Composite -.83%, NDX -.71, SPX -.53, RUT -.54 and the Dow -.56 closing on the days highs. Big gap down pressured the market early and a slow rise stepped in for most of the day to finish on the highs. Volume did not come in, which tells us the this drop was not viewed as a buying opportunity and shorts did not rush in to cover either. The TRIN closed bearish at 1.13 and the VIX at 25.73 12% off the 10dma. Gold rallied to close at $1216.50 +17.30 and oil fell $2.28 to $75.74 a barrel, levels we haven’t seen for a month.
The SPX, NDX, COMPX all are back under the 200dma and 50dma, the Dow dropped the 200dma and now sits on the 50dma. The COMPX support 2155.29 61.8%, NDX 1809.41 50% and 1783.60 61.8%, SPX 1082.84 38.2% and 1069.11 50%, Dow 10297.60 38.2%-10265.18 50dma supports need to be watched. 61.8% is very critical to hold or this drop has a lot more fuel than the bulls want to see as we head into the second half of August, which is typically lighter volume. Lighter volume allows for fewer traders to push the market in the least resistant direction.
Thursday brought a bounce to work off Wednesday’s drop. Now the market sits on support and we’ll have to hold over the supports outlined above to see the buyers step in. Early upside could still come in for the market to test a bigger retracement. However, the bears still held on today and kept breadth negative throughout the day. The TF over 626.70, NQ 1819 and ES 1092 should be watched for. We clear those levels heavier buying could come in, but until then we look to sell into any strength.
Economic data for the week (underlined means more likely to be a mkt mover): Friday 8:30 Core CPI, 8:30 Core Retail Sales, 8:30 Retail Sales, 8:30 CPI, 9:55 Prelim UoM Consumer Sentiment, 9:55 Prelim UoM Inflation Expectations, 10:00 Business Inventories, 11:30 FOMC Member Hoenig Speaks. Monday 8:30 Empire State Manufacturing Index, 9:00 TIC Long Term Purchases, 10:00 NAHB Housing Market Index. Tuesday 8:30 Building Permits, 8:30 PPI, 8:30 Core PPI, 8:30 Housing Starts, 9:15 Capacity Utilization Rate, 9:15 Industrial Production. Wednesday 10:30 Crude Oil Inventories. Thursday 8:30 Unemployment Claims, 10:00 Philly Fed Manufacturing Index, 10:00 CB Leading Index, 10:30 Natural Gas Storage, 12:30 FOMC Member Bullard Speaks. Friday nothing due.
Some earnings for the week (keep in mind companies can change last minute: Friday pre market ADES, CTFO, JCP, and nothing after the bell. Monday pre market LOW, SYY and after the bell A, URBN.
