Fund rebalancing has had a negative influence on the market and it will subside after today.
PRE-OPEN MARKET COMMENTS TUESDAY – Durable goods orders came in a little better than expected (1.7%) and Consumer Confidence will be released after the open. The third estimate for Q1 GDP will be released Thursday. This data is old and it is not going to move the market. Official PMIs are not likely to have much of an impact either since we got the flash numbers a week ago. China does not release a flash PMI so we will get a fresh look at their month Thursday. We had “Fed Speak” last week during Powell’s Congressional testimony so Fed comments are not going to have much of an impact this week. This is a 4-day holiday coming up for all intents and purposes. We are likely to see a little more selling pressure in equites todays as Portfolio Managers rebalance into the end of the quarter. Given T+3 settlement on equities, this negative influence should wane after today.
The market closed on the low yesterday and the heavier volume has been coming on the declines. In the chart you can see the AVWAPQ that started the day after triple witching. That level has provided resistance. Until we close above it, keep bullish swing trades to a minimum.
The volume has remained light as the market retraces from the high that was set over a week ago. I still view this as a normal pullback in a bullish trend. Expect light volume and compressed intraday ranges this week as we head into a holiday. Be patient. Find the strongest stocks while the market probes for support. Wait for tails or a bullish hammer/bullish engulf off of the lod and a bullish 1OP cross. Make sure all of the checkboxes are marked.
We have been seeing a high early in the day and then a choppy drift lower the rest of the day. This is a tough backdrop for trading from the long side. 1OP is going to start off in a deep trough. Our best scenario would be a nice probe for support in the first 30 minutes and then a nice bounce from that level with stacked green candles and decent volume. We might not get that until Wednesday. The pattern we have seen recently needs to reverse. We need to set an early low and then grind our way back, closing on the high of the day. There have been some nice shorting opportunities, but I would leave those to the pros. When we do get a bounce, it is likely to be fairly sharp and I am expecting a bullish trend day in here soon.
Overseas markets won’t have much of an impact. Europe was down a touch and Asia had decent gains.
Support is at $430 and resistance is at $434.50.