Monday was a wakeup call to bulls who sometimes get complacent, despite the S&P500 and SPY reluctance to close below the key 9/21d moving averages. Until SPY closes below the 21d we DO NOT have a sell signal. Monday’s test of the 9ema (closed above) was a caution signal. We hedged and will likely reduce said hedges should the market rally today.
Summary
SPY Daily
RSI is above 50. MACD is above its signal line and zero. VBP (left panel) is major support. A pullback below the 21d is a sell signal, thus no sell signal, only a caution signal as price action rebounded off the 9ema.
Be alarmed if price closes below the 9ema today after banks report. WFC already posted ugly numbers. So, we still have JPM, MS, BAC, GS, and PNC.
Consumer Discretionary XLY
XLY made a new high. It’s leading.
And, if Consumer Discretionary (XLY) outperforms the Consumer Staples (XLP) sector it tells investors that institutions are not positioning for a pullback. They aren’t buying defensive stocks.
This ratio can change in a week or two, so watch XLP and XLY.
Futures are green at the moment, (+9.50) 3158.00 though off the highs printed at 7:30 AM, 3164.00. Wait until 10 AM for a clear read of the market.
Join us today in the trading room for our LIVESTREAM broadcast during market hours, as we navigate the current environment. Watch, listen, and trade from 9:20 AM to 4:15 PM Monday through Friday.
Happy Trading,
Vinny
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