Stocks Retreat Mid-Session
Stocks Retreat Mid-session
The important price levels to watch today were 1045 resistance and 1019 support, both of which were tested today. In the morning the indices rose following bullish price action overseas. By noon, the SPX was trading above 1040 on average volume. Sellers took control shortly after and dragged the index lower from its high for the remainder of the day.
With an hour left in trading, the SPX hit 1018 and bounced into the close. Volume trailed off and advancers to decliners were about 1:1. Heading into Wednesday the indices remain weak and key support exists around 1019. Short term resistance around 1045 needs to be taken by the bulls this week to have any chance of a rally next week.
Service Sector Weakens
The U.S. service sector expanded in June, but at a less than expected 55%
expected. According to a survey by the Institute for Supply Management, the
ISM nonmanufacturing index declined to 53.8% last month from 55.4% in May.
A recording below 50.0% indicates contraction. The news was released about
thirty minutes after the open, which is also about the same time the market
topped for the day.
Watch List
I was expecting lower lows this week so I took profits this morning from
long positions initiated late last week. Shares of Puda Coal
(Nasdaq: PUDA) were sold for $7.55 or a 14% gain from last week's
$6.66 entry. Despite my bearish sentiment heading into the week, most of
the watch list companies this week are bullish trades.
Shares of China Valves (Nasdaq: CVVT) fought the selling
today and ended 1% higher. Shares of servicer Industrial Services
of America (Nasdaq: IDSA) also ended the day higher by 1% and held
the $10 area which remains key near-term support. Shares of
Abercrombie Fitch (NYSE: ANF) were a top buy going into
the week and started the day 5% higher before reversing into the close
today and could be a nice buy into tomorrow. The euro also continued its
pattern of gains rising by 0.7% to $1.26.
The indices remained pressured by selling, but strength from the euro and
energy today has me optimistic a rally is near. Whipsaw Wednesday is always
a good time, and tomorrow should be no exception, as the market prepares of
jobs data Thursday.
