Futures started off early this morning pre-market on a positive tone, but it was hard to sustain without help from the banks. The S&P took out the recent pivot low of 1430-1432 (putting a low in around 1425). Within the past week we’ve seen technical damage adding up, giving traders time to switch gears and get out of longs. If you are sitting in cash right now, there could be great dip buying opportunities over the next few trading days.
Right now the market is just above a big support area, 1422-1427, a zone that also contains the 50-day. That level on the S&P has turned into a magnet ever the Nasdaq broke its 50-day last Tuesday. At this point, it’s probably a good spot to cover some shorts, but it’s probably not the time to put on additional longs if you’re a professional trader in front of your screen all day.
JP Morgan (NYSE:JPM) got an initial push to go positive after its gap down this morning, but was not able to hold those gains. JPM looks set to finish the day down around 1%. The banks had a big run into earnings season, and it appears stellar reports are priced into the stocks. JPM beat on EPS and revenues, but still was unable to push higher.
Wells Fargo (NYSE:WFC) also beat on EPS this morning, but fell short on revs and is getting punished more severely this morning. WFC is down about 3%. Wells Fargo has been perhaps the most steady performing bank stock over the past few years, but may need some time before heading back toward highs.
By Marc Sperling
Disclosure: Marc Sperling is long SRPT, SHOS, ANTH, ZNGA calls, RIMM calls, MCP calls, YHOO calls, FB calls, GMCR calls, GRPN calls, AIG calls, SPY puts, SRPT calls, YHOO, FSLR calls, TLT puts, SHOE, MLNX calls, FIO calls. Short GOOG, FB, JPM, AGU, SHOS.