Futures are strong this morning after yesterday’s bounce from oversold conditions. The Oscillator on Tuesday had a -80 or so reading, a level that usually leads to an oversold bounce. On today’s open, this tool will be getting more neutral and we’ve probably penetrated more than the bears would have wanted during this snap back. A retest of the accelerated uptrend usually takes place, how the market deals with this spot is very important for short term direction. Market participants will have some maneuvering to do in the next few days.
The S&P is opening up above the 20day moving average of 1358 and around the 10day of 1363. If you are an active trader coming in flat. You should try and fade/short this area at first attempt and not Chase and buy on the open. If we maintain above 1358-1362 for the first 60 minutes, I would not be stubborn.
Macro investors that have longer time frames had nothing to worry about. If you take a step back and look at what transpired as of now. When all is said and done, the S&P held it 25% Fibonacci retracement, which was Tuesday’s low at 1340ish. Holding the 25% level signifies a very strong market.
The Weaker sectors that lead us lower- small caps Russell 2000 ETF (IWM), Semiconductors (SMH) Oil Service Sector (OIH)- but they all held their 50day moving averages. That is also healthy action in a strong tape. Some leaders still act well and we continue to see the strongest stocks hold above their 10/20day moving averages as some indices did not.
So take a step back. Evaluate your time frame/commitment and don’t be stubborn in your stance. Let the market do the talking.
Two segments from last Night’s CNBC World Markets segments.
(Scott Redler, Chief Strategic Officer, T3live.com, talks about key levels to watch for the U.S. equity markets.)
*DISCLOSURES: Scott Redler has no positions