World Indices Collapse SPY USO DPZ NFLX GS BAC
The market failed to accomplish anything last week. Volume was low, price movement was miniscule and SPX closed exactly at 1332 support. Meanwhile 1350, which is a long term resistance area we have been watching for the past four months, continued to prove a barrier to higher prices.
The bulls will need to step in and support the market early today. I had thought that if 1332 could hold, the bulls could juice the market higher last week. That stance appears to be wrong. Market leaders like Netflix (Nasdaq: NFLX) and Domino (NYSE: DPZ) have been dragged lower this morning alongside weak stocks like Bank of America (NYSE: BAC) and GoldmanSachs (NYSE: GS).
The Asian indices were destroyed last night and Europe trades with heavy losses this morning. The pain overseas bled into oil, which is down nearly 3% and the U.S. market was dinged for about a percent at the open.
The first area of support is 1301 – and that should hold today and into tomorrow. A break down from 1301 likely results in a sharp decline to 1250 which I believe will certainly hold. A break below 1318 is also a break down of a mini channel. A break down from a channel is often a strong warning sign that the trend changed. Additionally, that type of break down will often result in a sharp decline. With durable goods orders (a major economic data item) for April set for release on Wednesday and a likely break down of the channel this morning, the bulls need to provide support to the market quickly – or risk a quick ride to 1250.
Other than April durable goods on Wednesday morning, the economic data is tame this week. On Thursday we receive second estimates for second quarter GDP. Then on Friday we obtain Michigan sentiment along with PCE price figures. The most important economic news comes Wednesday, and there are no important economic announcements today.
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