Monday left the day weary and kept the indexes in the five day range. The indexed closed down with the NDX -1.09%, Dow -1.38%, SPX -1.47, COMPX -1.56 and the RUT -2.43%. The markets volume fell along with the indexes to come in about half of Friday’s. That is terrible participation, but it is likely to be the lightest we see this week. The VIX closed at 27.21 on the days high and the TRIN at 3.62 very bearish. Gold closed up $1.50 to $1239.40 and oil down 47 cents to $74.75 a barrel.
The five day range is still holding the markets and the key support is just below the broader markets still. By holding range the market is still in the same formation Friday left. The Nas Composite holds over 2113.88 78.6%, NDX 1746.85 78.6%, SPX 1036.23 78.6% and 10036.70 61.8% on the Dow (charts below) after all testing and holding this past week. Those are key levels of support and still holds as the line in the sand for the bulls. If we hold here a very symmetrical shoulder could form for an inverted head and shoulders on the daily charts. The pattern triggered would signify a higher low and a bullish pattern by holding here and turning back up. However, the other possibility with this 5 day digestion which began with a gap down on the 24th could be a bear flag forming. Low level digestion after an impulsive opening
The futures indexes did test the daily and weekly pivots early in the day. It wasn’t until the final hour that we broke the 10ish point range the ES has played in throughout the day. The final hour sell off expanded our range and left us on the lows at the close. The ES broke 1054 and now has 1042.75 support nearby. The NQ dropped 1775 and now we watch for 1754.75 to test. The TF fell through 605.70 and now 598.40 is nearing as a key level. The sell off’s light volume leaves the market more neutral than we would be if there was volume on the drop. This light volume is due in part because summer is coming to an end and we are leading into a 3 day weekend.
Friday brings the big economic data, so I expect volume to increase throughout the week and we’ll watch for the bear flag or the inverted head and shoulders, two complete opposites for the market. Leaving us at the line in the sand and very neutral. The range bound market will eventually move, but needs to do so with volume to mean anything and hold any weight for continuation.
Economic data for the week (underlined means more likely to be a mkt mover): Tuesday 9:00 S&P/CS Composite 20 HPI y/y, 9:45 Chicago PMI, 10:00 CB Consumer Confidence, 2:00 FOMC Meeting Minutes. Wednesday 7:30 Challenger Job Cuts, 8:15 ADP NonFarm Employment Change, 10:00 ISM Manufacturing PMI, 10:00 Construction Spending, 10:00 ISM Manufacturing Prices, 10:30 Crude Oil Inventories, Vehicle Sales all day. Thursday 8:30 Unemployment Claims, 8:30 Revised NonFarm Productivity, 8:30 Revised Unit Labor Costs, 10:00 Pending Home Sales, 10:00 Factory Orders, 10:30 Natural Gas Storage. Friday 8:30 NonFarm Employment Change, 8:30 Unemployment Rate, 8:30 Average Hourly Earnings, 10:00 ISM Non-Manufacturing PMI.
Some earnings for the week (keep in mind companies can change last minute: Tuesday pre market DG, ENER, ISLE and after the bell APSG, DAC. Wednesday pre market HNZ, JOSB, JOYG, ZLC and after the bell HOV, MATK. Thursday pre market DLM, MOV, SCMR, and after the bell COO, FNSR, HRB, SEAC, TTWO, ULTA. Friday pre market CPB and nothing after the bell.
