Keybot the Quant remains short. Retail flipped into the bearish camp yesterday and the NYA shows the markets slipped back into a secular bear again--albeit slightly. The SPX:VIX ratio was under 68 foretelling a big down day ahead for the indexes and once the 1329.60 level failed, the rout was on.
For the SPX today, the bears only need to push about a point and one-half lower to accelerate the selling again. If 1303.50 is lost, the indexes will accelerate south again. The market bulls are simply trying to stop the bleeding today. The large drop in the indexes yesterday was not accompanied by weakness in utilities, that sector was flat, thus, this selling event is temporary and the markets will recover.
Typically, after a large sell off on a Wednesday, markets are weak Thursday morning but tend to recover by late morning. Considering the utes did not join the bearish band wagon, and that a positive debt ceiling agreement would launch markets skyward, caution is warranted. Support and resistance in this area is 1321, 1318, 1316, 1314, 1312, 1307, 1300, 1298, 1297 (gap fill needed), 1295 and 1292.
7/31/11; 7:00 PM EST EOM =
7/29/11; 10:00 AM EST =
7/27/11; 3:46 PM EST = -26
7/27/11; 2:27 PM EST = -12
7/26/11; 10:00 AM EST = +4; signal line is +24
7/25/11; 9:30 AM EST = +4; signal line is +24
The market bulls are simply trying to stop the bleeding today. The large drop in the indexes yesterday was not accompanied by weakness in utilities, that sector was flat, thus, this selling event is temporary and the markets will recover.
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