Better update since the market was ornery today. SPX closed at 4188.43 or -1.04% and NDX was down just under its 50-day average at 13359 or -2.68%. The RUT was down -2.59%. The support situation for this week has not altered much since Friday, but hedging will change slightly before tomorrow’s open. There were some things getting in the way of the bulls today, and financial writers will probably concentrate on some of the security news (energy supply/pipeline hack) that came before the open later (middle east things) in the day -- but the start of the selling correlates with NDX weakness. Despite any news, this all fits with the fact that last week's closing structure (including that over 4170) involved short covering and can be viewed objectively as a weak base to work from on a run to 4250 weekly resistance.
We started out with the SPX under the influence of NDX weakness, and the main spill started after lunch. We finished the ES cash session at the base of the single print surge from last Thursday. Recall that the Friday open above the single print run from ES 4180 is what traders took as bullish sign on Friday. Traders will be concerned that we finished today's session below the top of the previous balance area from last week. We are close to the weekly 4175 hedge that is in place as of early this morning, and traders will be watching closely to see how that holds tomorrow. They will also be watching to see if we can regain that point of contention at 4200. Will update that if it changes much.
The ES futures situation reflects repair of weak structure down to the single print base from Thursday and we have fallen into previous balance, where we are treading now post settlement of ES 4182. There is also a naked point of control at ES 4771 just below where we are now. Monday's value area runs from 4198.75 to 4230.75 and the volume point of control is 4221.75. There is a line of single print selling that took place from 4214 down to 4203 so traders may watch that area closely if we get any bounces later, as it coincides with that important SPX 4200 area. Watch that NDX 50-day average as it could be important.
The VIX closed at 19.66 and up +17.80%, but NYSE internals were not severely depressed. A-D lines fell from an intraday high of around +1000 to -1140 and breadth (volume ratio) finished at -1.83:1. NASD breadth was weaker at -3.42:1. Neither reading is severe but that is an intraday data point just for context. A severe reading is more like -10:1. US treasuries saw some selling that coincided the acceleration in equity selling, leaving benchmark yields (+2 bps) holding around 1.6% and the long bond (+4bps) is at 2.32%. Most of the action was at the long end with shorter notes adding a basis point each.
Asia and Europe will probably not like this action, so depending on their short-term view of things, those who do anything other than intraday work are waiting for more information and in caution/wait-and-see mode for now.
