Monday Market Recap: A Look Ahead

Futures were pointing to an early bounce on the back of retail sales climbing for the fourth consecutive month and as a result of merger and acquisition action.

The opening session of the week began with a three point gap higher and followed through for a few more points. The choppy session continued with a sharp and quick five point decline before recovering and putting the high of the day on the chart at 11:49 am. After a couple of hours of sideways tight range trading that lulled some traders to sleep, the bear once again awoke and the last two hours saw a nine point decline. If the bear keeps this up, we will decide there is more than one and add back the “s”.

Today’s late afternoon sell-off was blamed on treasury prices tanking; this may have well been the catalyst. But if the market isn’t ready to sell, it won’t. This market shows signs of being ready to sell. Bad news has once again become bad news.

The Dow closed higher but that’s an index that can often be disregarded. But it is interesting to note that the Financials (XLF) and small caps (Russell 2000) were both higher. 

I do expect the current down trend to continue and expect 1196 to fail. But the  real question is whether this happens through a gap down tomorrow morning or whether we see yet another failed bounce attempt. This market rode gaps over resistance on the way higher so a gap below support makes sense on the way down.

Breadth was a little more negative than the closing indices might suggest. The ten day average of Net Advancing is approaching zero and may turn negative.

For much of today, volume was increasing as the market was moving higher; this is most often bullish. But volume then spiked on the late session sell-off as well. So the jury remains out on this.

The nightly breadth indicators are mixed after today’s mixed close. But on balance, the indicators remain somewhat bearish. Check out the action of the McClellan Oscillator and the Summation Index. Also notice the move higher in the High Low Logic Index.

Silver has taken a big hit and the chart seems to be breaking down big time. To me it looks like 20dma has been support previously but there is a lot of new, or hot scared money running for the hills so I don't really know. If yo are long SLV the only encouraging thing i see is that the volume has declined since the blow off top and perhaps the sellers may be drying up.

The gap has been filled with that out of the way maybe we go back up?? On the other hand it hasn't respected its 20 dma and looks to test 129-130 area so I will wait to come in until then. But I cant see SLV holding 20 dma and GLD falling so I don't think that bodes well for SLV. 

See my previous take on this matter I have a nice gain on TBT (double short long bond), The TLT has reached my short term target will take a little off and wait for a bounce in TLT before I buy it (TBT) back.