The S&P closed Monday at 1020 - pretty much where the futures were at this time yesterday. Today the futures are down around 1014-1015 - is that where the close will be today?
Things continue to trade in the trading zone that the market has been in ever since the move above 1014 on Aug 21. Consider that the S&P closed on the first trading day in August at 1003 - and ended the last day of August at 1020. That's 17 very hard fought for points over the course of a month. Not a very good showing by the bulls who want us to believe that we are in an historic bull market.
S&P500 - 15 Min Chart - 4 Days
I shaded in yellow the trading zone - and in red below it, the Valley of Death with the Fibonacci 38.2 Retracement as the upper boundary at 1014. That boundary, which served as very tough resistance earlier in August served as support yesterday. From here, the way forward comes down to 3 choices - either 1014 holds and serves as a boost for another trip upward, the same way that 980 acted a few weeks ago and the uptrend stays intact. Or 1014 gives way, the uptrend ends, and we look towards 1007, 1000, 992, and then 980 for support and clues whether this will be a real downtrend or just a pullback. Or, things will bump along at the bottom of the zone, but not breaking 1014, for the rest of the week waiting for everybody to come back after Labor Day.
Almost everybody is expecting September to be potentially pretty bad. Question - if you were a big fund manager, would you want to hold onto a large stake going into the long holiday weekend? If anything, I would expect that that should put some selling pressure on stocks as we move through the week. See what happens with 1014....
Later