Meltdown…Yesterday the Transports made a new low for the year and are trading right on their 200 day moving average (failure to hold their 200 day m.a. would be bearish action for the entire market). The Nasdaq went right through half way for the year at 2546.37; now their 150 day smooth and 200 day moving averages are in play. If the Nasdaq can get back above 2546.37 I think that could spark a rally across the board.
The VIX made new highs for the year and is closing in on their 200 day moving average at 25.77…violation of their 200 day moving average could cause some additional selling pressure in equities. The Dow is well below half way for the year and are closing in on their lows of the year at 12,221 (also in that area is their 150 day smooth and 200 day moving average).
The S&P futures have blown through half way for the year at 1339.75 and in the overnight session they came very close to testing their 150 day smooth moving average at 1289.59. I think that the bears have reached a short term objective by coming up just short of their 150 day smooth moving average; now I think that the bulls are going to step in and protect that overnight low.
Today I will be initially looking to buy breaks down to support at 1298.50 using short term strategy. I will be looking for a possible test of the daily pivot at 1314.00 where I will look to be a seller. Failure to hold below the daily pivot at 1314.00 I will be biased to the long side (keep an eye on Nasdaq 2546.37-above it would be bullish action) and then be looking for a possible test of resistance at 1329.75 where I will look to be a seller.
If we fail to hold above support at 1298.50 that will be bearish action and I will then be biased to the short side looking for a test of the overnight lows at 1293.50 down to the 150 day smooth moving average at 1289.61 where I will look to be a buyer. Have a great weekend!
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