The Asian markets closed lower across the board and Europe is going for a ride this morning. We said that there was a high level of anticipation about S&P 1700, and yesterday they sold the better AAPL earnings news.
This is a normal pattern while approaching a new high / big figure. With the S&P up nearly 20% this year, smart money sold the rally yesterday.
Nothing goes up forever, and if you look back on the overall prices during this year’s rally the S&P is doing what it’s done all year: make a high and then have a small pullback. Yesterday a sell signal was triggered as selling intensified. Down volume reached 75% of total up / down volume. It was the most selling since the June market low.
This suggests the potential for further near-term weakness. With the S&P down 8 handles this morning and down 3 out of the last 7 days, there is a potential for the first three consecutive down days of the year.
Our view is to buy the early weakness. We don’t doubt the S&P can slide further, but we also think there can be a late-day rally.
It’s 8:30 a.m. and the ESU is trading 1676.25, down 7 handles; crude is down 88 cents at 104.51; and the euro is up 26 pips at 1.3223.
In Asia, 11 out of 11 markets closed closed lower (Shanghai Comp 0.60%, Hang Seng -0.31%, Nikkei -1.14%).
In Europe at 8:30 a.m. 11 out of 12 markets are trading lower (DAX -1.03%, FTSE -0.63%).
Today’s headline: “S&P Futures Seen Lower Ahead of Durable Goods Report”
Total volume: 1.5mil ESU and 3.3k SPU
Economic calendar: Durable goods, jobless claims, EIA natural gas report, and a 5-year note auction.
Fair value: S&P -3.14; NASDAQ +17.74
- MrTopStep Closing Print Video: http://mrtopstep.com/2013/07/mrtopstep-closing-print-07-24-2013/