No breaks for the bulls.. $SPX 1059 or 1072?

Good morning. 

 

No breaks for the bulls.  A little green yesterday from a  grind up  that was wiped away by overnight action.  The dollar hit an overnight low at 82.40 and has rallied up .63 to 83 area and the futures have sold off accordingly.  Economic news overnight looked ok.  The German PPI number came in a little hot .6% but tells us that our low numbers last week are currency related so stop using the deflation word.

 

Earnings last night were mixed.  The Trading Room was watching IBM, NE, TXN, ZION as upside plays and every single one of them sold off after their earnings.  Zion Bancor missed big that should hurt the banks today.  Texas Instruments missed top line but met bottom line and for that was punished 5% down in after markets.  Their outlook was bright and their miss was mostly execution and the inability to ramp up fast enough to get product out.  So semi wise the industry looks to be rebounding and gaining strength as TXN also raised their guidance. Noble was just a big miss. I assume the drilling ban by the US will be blamed but we will have to wait for the 10 am conference call on that.  And IBM? Again a top line problem as they blew out the earnings number.  Still top line growth was shy and although they raised guidance for the end of the year it was also shy on the top line from consensus so the stock gets punished 5%.  Tough crowd.

 

Bottom line, not much momentum from earnings into the open.  But the bulls should be rescued by premarket economic news with building starts and building permits (laugh). Bleak on the upside.

 

Quote of the day:
College isn’t the place to go for ideas. – Helen Keller

 

Chart

Score

 Day-1

Change

40 DPI

+4

-6

+10

52 WNH

-6

-6

0

10 DHL

-0

-4

+4

Total

-2

-16

+14

 

Big move to the bullish side for the breadth charts but not enough to switch it to the bull side in a composite score so downside is still the play today.

 

We are starting off as I write at 7am with about an 8 point downside gap so I would not expect the breadth to change today unless we have some type of key reversal turn-around Tuesday.

 

 

$SPX chart:

 

Let’s talk upside today in case we get a bouncing turn-around Tuesday.   I left the 1072 line in which the bulls need to break and hold above.    Yesterday the judge’s score went to the bulls as the bears were unable to break 1059 but the bulls did hold there and did break 1072 although not able to hold.  So the bulls win with a decent hold and rally.   Today with the gap down head start for the bears they must break 1059.50.  If the gap down holds into the opening the $SPX should open right about there. If the bears do beak I don’t have much for ten points below that so we could get a fast 10 point drop if the bulls just pull back and the bears put the pedal to the metal.

 

If somehow the bulls are able to hold onto 1059 it could setup a rally above 1072 and a break above 1072 and again there is not much there for about 8 points to the upside so we could have a good upside run.  Either way the market is trapped between 1072 and 1059 looking for a breakout one way or another and when it does.. watch out.image

 

Trade on.

Marlin aka: RedLionTrader

 

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