No Greece deal and some signs of China slowing has the futures under pressure this morning. This is the biggest gap down of the year so far, and will be a true test of composure/speed moving forward. In the last few sessions the market was hypnotized by Apple (AAPL) screaming higher as the breadth of the market narrowed and key stocks failed at Momentum break out levels. Yesterday you also had the VXX close at the highs of the day as the market was well off lows. All signs that the three days of choppiness might not end well for the short term Bulls.
There is an “Ascending Channel” that I’ve talked about numerous times in the last week or so. This will be tested today. There are actually three of them, each one with a different angle of intensity. The first real level on the S&P is where we are opening near 1333-1336. A daily close below this will knock out some of the Momentum Bulls.
Strong markets usually ride a 10/20day moving average, which we are extended from. So this market can retrace down to 1318-1322 and still be considered strong! Under this is 1306-1312 level is a major area.
See if any groups/stocks can go green today besides AAPL. This will give us some clues to the type of day we might be in for.
Disclosures: Scott Redler is long SPY, OIH, QCOM, VMW, WMT, TBT, HAS, LULU, LNKD calls, VXX. Short DIA, QQQ.
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