Finance Banter

In yesterday’s Market Wrap I pointed to 1057.50 as the potential upside if the bulls took control…and we nailed it. However, when the bulls were unable to break through 1057.50 following the fed meeting it seemed like everyone just let loose a collective sigh and slowly began to sell some inventory. 

The financials were the weak link from the get go. We saw higher gaps in the likes of WFC, MS, USB etc. get sold immediately. Even with the initial strength in the Emini and the weakness in the greenback…the financials were not able to stand their ground. If the XLF (financial sector ETF) is unable to find support between 13.60-13.75 this market will have a hell of a tough time finding its footing. The banks can trade sideway, but if they continue weaken we are likely to see sellers become more aggressive. 

Regarding the commodity and the commodity based stocks…watch the dollar (76 and 76.20 are short-term resistance on the DX). If the dollar remains weak we should see momentum traders flock to that which benefits from a limp greenback. The momentum behind gold continues to be mind-boggling, but remember…gold tends to climb higher and then jump off a cliff. Don’t get intoxicated by price momentum. 

For tomorrow’s trade—the bulls need to push the Emini back above 1048.50 and target 1057.50. I still think the bulls have a shot at pulling off a 9^th inning miracle and making a run towards 1064. However, I do not think they sustain a trade above 1064 with out additional consolidation.

The bears need to do one very simple thing—crash 1037-1040 with some serious firepower and target 1026. I would expect strong bid support to be present between 1037 and 1040. 

Good luck tomorrow.

Disclosure: No positions were held at the time of publication, though that may change at any time.

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