Tuesday brought another day that was a race with a photo finish. The bulls had a modest gain in the COMPX, NDX, SPX leaving the Dow with a small loss. Volume was split with the NYSE and futures slightly lower than Mondays and the Nasdaq slightly higher than Monday’s. Overall was a very narrow range leaving us with tiny ranges and no conviction across the market. The TRIN closed at 1.20 bearish and the VIX at 28.27. Gold closed up $2.30 at $954.80 and oil up $1.83 at $69.92 a barrel.
The narrow range continues to wind us tightly off the highs and leaves the bulls within striking distance of the 38.2% resistance overhead. The Nas Composite 38.2% 1876.19 38.2% will be key to this move through the line in the sand. Nas 100 has 38.2% 1498.36 as the line in the sand. 1014.14 is 38.2% for the SPX and the Dow is just over the 200dma and still sits under the January highs. Baby steps this for the Dow and still has 38.2% is overhead at 9422 leaving the Dow with plenty of room before it hits the line in the sand the other indexes are nearing. The daily charts for the broader markets has the CCI is on 100 line support, Stochastics are turning down slowly, not opening but angling down and the RSI is 60-70 also coming off the highs with a flat MACD. Leaving us to need to see the move through the highs from last week sooner rather than later or this neutral tone will turn bearish quickly.
Late day lack of momentum leaves me to look for a move lower early Wednesday and for buyers to find something to do from there. Dip buying is limited in these narrow ranges, but sellers aren’t any more aggressive with the VIX dropping off and the range this narrow. The resistance overhead is large and until we see how the market moves into those levels we can’t assume the market will drop for a bigger retracement to let buyers in. Futures rollover this week which should pick up the volume and volatility Wednesday and into Thursday’s expiration. Although our volume is lighter than we’ve had in the first five months of the year, this is normal to drop off into June. People take time away for summer breaks and this is likely to be the levels we have to deal with for awhile. The levels are not horrid, just lighter than we’ve seen for awhile so it takes time to adjust to that slower mentality. The digestive range hasn’t helped that but Wednesday and Thursday should bring a range expansion and get us out of this high level consolidation for a nice smooth ride.
Economic data for the week (underlined means more likely to be a mkt mover): Wednesday 8:30 Trade Balance, 10:30 Crude Oil Inventories, 12:15 FOMC Member Duke Speaks, 2:00 Beige Book, 2:00 Federal Budget Balance. Thursday Futures rollover to Sept (U) contract, 8:30 Core Retail Sales, 8:30 Retail Sales, 8:30 Unemployment Claims, 10:00 Business Inventories, 10:30 Natural Gas Storage, 1:05 FOMC Member Lockhart Speaks. Friday 8:30 Import Prices, 9:55 Univ Of Michigan Consumer Sentiment, 9:55 Univ Of Michigan Inflation Expectations. Saturday G8 Meetings
Some earnings for the week (keep in mind companies can change last minute: Wednesday pre market STEI and after the bell MW. Thursday pre market DLM, HOKU, LULU, SCHS and after the bell NSM, SGK. Friday nothing due out.
ES (S&P 500 e-mini) Wednesday’s pivot 940.50, weekly pivot 938.25, monthly pivot 904.50. Intraday support: 936.25, 933.75, 930, 925.50, 923.50-921.50 fills gap, 914.75, 906.25. Resistance: 941.75, 944.25, 946.50, 952, 956.25-957.75, 959.25, 968.50.
