Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
This area at S&P 1393/1394 is important and this is the third day of the past four the market has come down to visit it intraday. The last two times have led to bounces but the more times we visit the more troublesome. The reason this level is key is it is where the index broke out of during the April correction, so it was a line in the sand to the upside, and this week to the downside.
If this area were to break, the ‘gap up’ of 1385 (not visible on the chart above but it’s there on the SPY ETF chart) post Apple earnings would be the next level. If that were to break, “filling the gap” from the post Apple announcement would seem very likely. Of course tomorrow morning’s news is going to most likely gap the market one way or the other.
Looking at the ISM today and the news flow for the week it’s been relatively bad. Aside from weekly job claims this morning, and ISM Manufacturing Tuesday there has been a lot of bad news absorbed – but it would be helpful for this market to get a few pieces of consecutive “good news” items.
Small caps continue to be troublesome as the Russell 2000 continues to be the weak sister.
