Tom has the focus on Apple and I think that is a great focus spot. We are currently gapped up big pre-market and waiting to see if the gap holds.
The rest of the world this overnight has done a nice job holding on to small losses:
Asia
Although the indices are in the red, the Nikkei and Hang Seng closed both near their highs. They both had very weak gap down openings and recovered most of the day. Read more strength than the numbers show.
Europe
The same goes for Europe, although the numbers are red they have been improving from the opening all day and could with a good U.S. open end in the green today.
United States
For economic news we have existing home sales at 10am. The housing numbers have been week and the markets are most likely expecting a weaker number so an upward surprise could add some energy into the bulls. Watch for price movement around 10 am.
Earnings:
Earnings this morning are mostly in already and appear to have set a good start for the day. The Ericsson miss looks big..
Breadth Charts.
The breadth charts from Friday are setup as follows:
40 DMA % Index:
Just a few days ago we were writing about the 20 DMA crossing for the RUT and what a good sell signal that is. Since then it has really traveled down. Expect a bounce today or tomorrow. A good movement for the bull would be to correct a little more before heading back up into the bear territory. The chart scores a -6 today.
10 Day High - Low
Assuming some of this gap opening will hold today. There is no economic news and the earnings are all in so I would imagine we would get some pop today. That should put an end to the lower bar sequence of the 10 day high minus low chart. One more day of weakening would have been good. Our sell off from the top was too fast too quick. Getting to that minus 60 number would have made for a better run up but we will take what we get. This chart also scores a -6 today.
52 Week New Highs:
This chart also scores a -6 today. A gap opening should help slow the downward momentum this morning. By 10am we would like to see about 40 new 52 week highs established on the NYSE. This would put us on pace to a neutral chart. 100 new NYSE 52 week new highs in the first 30 minutes would be a bullish turnaround signal. If you are in the room I will let you know at the 30 minute mark if there is anything flashing here.
Conclusion:
The charts are bearish and that is obvious at the price action over the last 3 days. This is a US lead dip and although the World Markets did not add to the downward momentum, this morning's gap needs to hold and an"all-clear" bottom put in place.
The techs are waiting for an Apple save here and perhaps could give us a nice thrust bar tomorrow or more downward selling.
Watch the technical levels for the next directional move. We need to establish a bottom. We could reject this bottom with a powerful up bar or we could consolidate around here. Either way for the bulls we need a higher close than Friday and no real prints below Friday's low.
SPX
I have the wide goal lines again because of the broad sell-off from Friday. The bulls need to not set lower lows and close a green bar today. The bears today need to continue to drive lower. Prints below 1090 SPX and a close below there also would really get the markets worried. Below 1085 is a large area for fast downward momentum right down to 1070 area. Watch a break of 1085.
ESH10
Those levels for the SPX translate to the ESH10 chart as above. The bears need prints below 1086 and the bulls need to get up and over 1110. I have marked some intermediate areas that I will be watching for potential support and resistance.
Hope to see you in the trading room and in the markets. Looking for a bottom to form today.
Marlin aka: RedlionTrader
