S&P 500 Trading Outlook (1-2 Days): Trimming / hedging positions
It’s a disjointed stock market where the NASDAQ is running hot but laggards appear to be holding up.
A bullish view on the S&P 500 (NYSEARCA:SPY) still makes sense barring a close under Tuesday’s lows. Such a move would turn the trend immediately negative.
However, I think its just a matter of time. The market may hold up for another week or so, but a correction is approaching. I’ll be looking to book gains and build a list.
Noteworthy that FANG stocks appear to be topping out here.
The S&P 500 might hold up longer than NASDAQ. Industrials and Healthcare should hold up into next week while Technology and the NASDAQ show weakness.
Overall, getting under Tuesday’s lows is important for thinking the trend in US indices is turning down across the board. A combined effort by NDX, SPX and DJIA in getting under this weeks lows should provide the much-awaited pullback into late July. The next 1-2 trading days will confirm whether next week sells off into end of week, or can hold up a bit longer. However, the selloff looks to be approaching, so holding up would just be a temporary fix.
Not an easy market
After being negative for the last few days into Thursday, it looked like Wednesday’s move was bullish enough to hold the SPX up into next week. NASDAQ however, nor DJIA had made any real progress, and both the latter turned down to multi-day lows as of Thursday’s close. Treasury yields pulled back sharply while the Dollar attempted to make yet another day of gains, which caused some weakness in Emerging markets after a fairly stable effort lately in the last week.
Overall, no real conviction right now until US indices start to show more evidence of reversing en masse under Tuesday’s lows (2789 for SPX, 7292 for NDX).
Trends for now remain short-term bullish for Industrials and Healthcare while Technology and FAANG stocks in particular, have faltered. However, a selloff does look to be approaching and the trend for 2-3 weeks is bearish, even if stocks manage to hold up for a few days. It looks right to use rallies to flatten out if given the chance while using a close under Tuesday’s lows to adopt a more negative stance, particularly on broad-based, higher than average volume decline.
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Author has positions in mentioned securities at the time of publication. 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.