North American markets 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% .
The S&P 500 closed down nearly 30 points to 1877 and completely engulfed Friday’s candle. It is still holding above the 1870 support structure but needless to say today was not a good looking candle for the short term bounce scenario. The saving grace may be the lighter than average volume (SPY) behind today’s move which signals the bears were not out in force…yet.
You can look at today’s intra-day analysis here
Until it closes below 1870 the short term technical bounce remains in play but today’s trouncing in OIL was a major setback. At the moment the markets are being completely driven by what happens in the Oil market so tread lightly as Oil is in a spiral downward and the supply and demand fundamentals don’t look good.
I still expect to see a lower low on Oil sometime soon which will take these fragile markets even lower.
End of day market internals are still in oversold territory and the McClellan oscillator remains in an oversold condition. The basing behavior at the McClellen oscillator lows is suggestive of further weakness once the selling pressure resumes. I don’t expect this rally to last too long or retrace very far. 1928 is the first hurdle but 1950 may be where this move starts to fizzle. Time will tell but world conditions and a strong US dollar as a drag on S&P 500 earnings will be a headwind for the markets.
We will see what tomorrow brings. This is not a buy and hold environment.
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