S&P 500 Futures:Â (2-3 Days) Bearish
Heading into the last day of the week, the short-term trend for the S&P 500 (INDEXSP:.INX) remains down. A bounce is occurring across the stock market indices but it has thus far failed to make enough progress to think lows are in place.
Until futures prices can get back up above 2351 at a minimum, but really 2367-8, the trend for stocks is bearish and should lead to a final pullback to new weekly lows. This could see the index decline to the 2293-2300 area before any real low is in.
TECHNICAL THOUGHTS
Short-term Decline ongoing – Defensive stance warranted: No change in prior thinking. Equities made a valiant effort in trying to rally early on, and actually got above the key 2351 level where prices had broken down from early in the week. However, with the late day selling yesterday, regardless of the reason (lack of healthcare vote) was a negative, prices still look vulnerable to declines in the days ahead.
Financials were one of the chief culprits in erasing nearly half of early day gains. XLF closed well down off early highs after their own reversal attempt and look to move down to new lows into Friday and/or early next week before a low is in place. The yield curve and 10-year Treasury yields, similar to the Financial space, shows no evidence just yet of a low in place, so a bit more weakness looks likely.
Consumer Discretionary should be highlighted for its underperformance of late, as weekly charts show the potential confirmation of the same Demark based sell that’s affecting Financials, Industrials, Healthcare in the short run. Retailing continues to be a real laggard within this sector and appears like an ongoing underweight in a sector to avoid and/or short within the Discretionary space. While Homebuilders continue to provide the main source of strength for the group, the Retailers are the definite laggards.
S&P 500 Futures Analysis
S&P 500 futures managed to rally back above 2351 ever so briefly before violently snapping back into yesterday’s close. Regardless of the reason, and there doesn’t need to be one, this area was considered important for price to overcome at a minimum to expect rallies could happen. Given that this failed, prices still look vulnerable and until Thursday’s highs can be exceeded and hold on a close, its more likely that prices pull back to undercut lows into Friday into early next week before a low is in place. Cycles suggested that 3/24 could be important for a change in trend. At present, most of the near-term structure still seems to favor a final pullback to new lows before suggesting dips can be bought.
Note that you can catch more trading ideas and market insights over at Newton Advisor.  Thanks for reading.
Twitter: Â @MarkNewtonCMT
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
