Where are the catalysts for a rally?
Futures are trading higher this morning, up 9 points at 2122.00 (+/-).
It’s hard to tell if the technology sector is really working, given the selling at Wednesday highs.
Semiconductors moved higher. along with the hardware industry group. Internet and mobile communications stocks helped the sector. Software and the various electronics industry groups dampened an otherwise bullish advance on Wednesday.
Few other sectors share my enthusiasm. SPY is still reeling from two Major Distribution Days, Friday and Tuesday, which sent many stocks lower. An advance back above resistance levels will be difficult.
For one, traders seem reluctant to stick their collective necks out. Until we see more conviction, we are more likely to see lower prices in the short term. We really need to see a broader based rally off the pivot low set early in the week, which must include more sector participation. By contrast, all we see is weakness across the sectors. The exceptions are biotech (XBI) and technology (XLK). Both faired well on Wednesday, closing green on the day.
Can we rally back above 216.23? Or will overhead support levels remain as resistance?
We noted SPY 60 minute chart several times towards the end of Wednesday session. We’re looking for decisive direction, ignorer to judge a short term direction. If several sectors turn higher and yields turn lower today, that would be a welcome sight for discouraged bulls. Given futures positioning to the bullish side, it appears that we make break higher on this third attempt to regain the descending 9/20ema.
Watch short term yields
Yields ebb and flow from day to day. The 2, 5, 10 year yields were lower on Wednesday, the day after a major surge of more than 4% across the spectrum of short term yields. This back and forth is affecting equities. The dollar is also an issue.
Have a great day.