Market Morning Huddle – 25 January, 2016

BEARISH MID-TO-LONGER-TERM (Weeks-To-3Months+): We are currently experiencing a technical bounce in North American markets. If the S&P 500 breaks back below 1,880-1,870 (a key support floor), and if the Crude Oil (WTI) reverses back below $30 aggressively. This market has more downside risks than upside potential in the mid-to-longer-term.

BULLISH SHORT TERM (Days-To-Weeks): Entering this week higher risk long side positions were on play with the deeply oversold technical bounce that started January 20th, 2016. S&P 500 (SPY), Nasdaq (QQQ), Russell 2K (IWM), Int’l Developed (EFA), Emerging Markets (EEM) and TSX (XIC).

We remain in HOLD mode on these positions into the open, looking for a momentum break above 1,928-1,921 on the S&P 500 to signal potential adds; however, a breakdown below 1,880-1,870 will likely stop us out or provide those without stops higher odds to de-risk.

Pre-Market Action: We are seeing a mild form Risk off tone to the markets into the open.

S&P 500: Pre-market the S&P 500 is down -0.5% (support on SPY of $189.50 is holding and resistance of $190.33 from last Friday is holding pre-market = range-bound trade intraday);

DOW: -0.5% Down moving in tandem but may outperform as traders look for safer stocks on a down day. MCD up pre-market with a solid earnings beat.

NASDAQ: Nasdaq is moving in tandem with the S&P 500 -0.41%

RUSSELL: Russell is under-performing down -0.8%.

TSX: The mild weakening (profit-taking) within the commodity complex coupled with the weak-form risk-off tone to equities globally implies the TSX under-performs the S&P 500 into the open

BONDS (TLT): TLT (US Treasuries) +0.6% pre-market catching a mild bid but traders are not running for the hills to buy defense yet.

OIL: Currency flows support a mild weakening in commodities persisting in today’s trade; however, this likely turns on a dime Jan 27th, 2016 when Yellen more likely kicks the can down the road on the next US Rate hike (weakening the USD and supporting a bid to commodities, at least technically).

GOLD: Gold +1%; remember these defensive assets are dislocated and relatively expensive.

VIX: Volatility pre-market is mildly stronger +1% but clearly in swing-high formation on the daily charts (supportive to the bounce continuing over the week).

The market is still configured for the risk-on bounce that started on Jan 20th, 2016 to continue, however jitters likely persist until we hear from Yellen on Jan 27th, 2016 at 2pm.

25jan2016-spx

Good trading!

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About the Author Dave Gagne

Founder of MarketInsidersClub.com. President and CEO Dynamic Wealth Financial Inc. Author of Trading Master Plan Subscribe to the MarketInsidersClub Youtube Page here

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Market Recap - 25 January 2016 - Market Insiders Club
2016-01-25 17:53:50
[…] experienced downward pressure most of the day. This came as no surprise as we discussed in the Morning huddle this morning. Oil was the driver today and it wasn’t pretty down more than 7.4% […]
J
2016-01-25 20:56:04
Good work! I enjoy your daily notes, pls write more. Thank you!