Tim Knight’s take on yesterday’s trading and his bigger picture view:
Important Point
I genuinely try to avoid talking about "crucial junctures" any more frequently than I must, but we’re at one now. Well, perhaps crucial is too strong a word, but I think tomorrow is a very important day for the short-term direction of the market. There’s a big retail report coming out before the open, and a number of big firms (including Intel, after hours) are reporting earnings. So the Q2 earnings season will begin in earnest.
Today [yesterday] wasn’t at all a good day for the bears. With the Dow up 185 points (having been down early in the trading day), and the $BKX bank index up over 6.5%, a lot of my short positions took it on the chin. My one really big position, my OIH short, I was able to exit at a decent profit, and I got into a couple of TBT longs that were good for me. But otherwise the day pretty much stunk.
Glancing at the FAZ and SKF below, you can see how July’s nice progression of gains got nuked in one session, and in both cases we’re sitting right on support. I got stopped out of both of these immediately at the opening bell (thank goodness).
The simple fact is that we haven’t had as big an upward move on the /ES since May. If tomorrow is another strong day, it’s probably back to the horrible Waiting Game, as both sides continue to wrangle each other. I had thought we had just about gotten the upper hand on this market, but today puts that scenario at-risk.
