S&P futures are down about 8-10 handles Thursday morning after more weak news out of China fuels more concerns for slower growth in the region. This time it was China Manufacturing Data providing the damper. There was also some concerning news out of Europe as Germany’s purchasing managers index fell to 51.4 from 53.2. All in all, the action yesterday gave us some caution signals. QQQ’s and AAPL both had a “push through failures”, which always leads me to clean up some excess longs. Combine this with many stocks closing off their highs and banks looking tired, and you have what could be the beginning of a pull-back. Individual stocks felt a bit heavier than indices in the yesterday afternoon.
The S&P is opening below the recent upper floor and the 10-day moving average. The 10-day on the SPY stands at $139.46, we need to see if we can reclaim it in the first 30-60 minutes of action. Bigger support is at the prior pivot high that stands around the 20day at $138.10-138.20.
The Nasdaq ETF (QQQ) pushed through $67.15, made a new high on the year, and then closed below it, a small sell signal. Small support stands at $66.30-66.40, while the 10day stands at $66.19.
Gold (GLD) continues to trend lower since February 29, and energy stocks have been showing relative weakness.
We will need to see if tech or the banks can go green today and help lead us off the lows. If not, it might make more sense to continue to clean up some longs and be back in a bit more wait-and-see mode. Know your time frame!
Disclosure: Scott Redler is long LNKD, BIDU, CZR, DNKN, ZNGA, MSFT, SNDK, TBT. Short SPY, QQQ.