This week’s economic calendar is about half of what it was last week, but it does have its share of Fed speak. We all know the jobs numbers came in light, but we also know that the S&P is known for taking bad news and making good of it.
It’s our guess we see more of the same this week in the S&P — some back-and-filling and then a return to the trend up. The Trader’s Almanac says that the first 9 trading days of August are weak and with the S&P inching up like it is, we think it’s prudent (if you’re long) to use tight sell stops.
Last Thursday CNBC did a story asking, “Should you short the S&P at all-time highs? Absolutely!” It was one of the stupidest stories I have read in a long time, so stupid that I am not even going to bother you with a link. Instead, I’ll provide you with a link to my yearly S&P net change chart and let you decide.
Our view is that nothing has changed. The S&P is still in a “thin to win” environment. While the S&P may sell off at any time, it’s important to recognize the difference between a real selloff and a pullback. I could throw out a bunch of levels like the CNBC story did, but we already know 1670 is support and there is resistance at the 1710-1712 level and, above that, the 1720-1725 level. After all, we’re in uncharted waters. But the wind still blows the same. We lean to selling the early rally and waiting for a pullback to buy weakness.
As always, keep an eye on the 10-handle rule and please use stops when trading futures and options.
- It’s 7:00 a.m. and the ESU is trading down 2.25 handles at 1701.75, crude is down 95 cents at 105.99 and the euro is trading 1.3259, down 29 pips.
- In Asia, 6 of 11 markets closed higher, with one unchanged: Shanghai Comp. up 1.04%, Hang Seng up 0.14%, Nikkei down 1.44%.
- In Europe, 6 of 12 markets are trading modestly higher: DAX down 0.24%, FTSE down 0.91%.
- Headline: Global shares rise, dollar soft as views of Fed tapering shift (Reuters)
- Total volume: LOW 1.2mil ESU and 5.6k SPU traded
- Economic calendar: Gallup US consumer spending, ISM Non-Mfg Index, 6-month bill auction and Richard Fisher speaks on the economy in Portland, Oregon, TD Ameritrade IMX.
- Fair value: S&P -3.57, NASDAQ -2.22
- MrTopStep Closing Print Video: http://mrtopstep.com/mrtopstep-on-youtube/#