Rollover, Rollover
Rollover continues in S&Ps, with volume evenly split between the front and back months, which will lead to choppy trading.
This morning, the Q2 Productivity Report was released above expectations at +5.7%. That is typically bullish for the market. However, after a brief flurry to the upside, the market went back down and was trading 200 points lower at 1510.30.
On the downside, we see 1510, 1509.50, 1507, a key at 1505.50, a major at 1504.70, 1502, and then 1499.50. On the upside, we see 1512, 1515, 1517.50, 1520, 1522.50 and a big area at 1524.50.
Yesterday, implied volatility for S&Ps shot up 2.63 points, further showing that summer is indeed is over. Morning Pivot is 1511 to 1513.
NASDAQ was trading down 1500 at 3984. Semiconductor stocks are again under pressure — Micron (MU) was downgraded. While this is not a NASDAQ stock, it is a key component in the NASDAQ-dominated SOX index. The big concern about this market has been the light-volume rally.
As we have seen in the last two sessions, the market becomes vulnerable when overbought conditions are coupled with light volume. Yesterday, Intel
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For today, we see support between 3978-3970, then 3955-3945, and then the key 3932-3927, which is crucial. If this is violated, look for a trade below 3900. Any settlement below 3897 will add to the negative sentiment. Underneath 3900, we have a cluster between 3865 and 3830, where the 20-, 50- and 200-day moving averages reside.
On the upside, conditions are now slightly oversold and could lead to a bounce. We have resistance between 4005 and 4011. Above that, 4025 to 4030 is critical. If we can get above 4030, it will take some of the short-term pressure off.
Between 4055 and 4085, we have a large resistance zone. In other words, the market has much to overcome to get to the upside.
The Dow was the best performing index yesterday, finishing up slightly. Rather impressive considering INTC’s sharp decline. The consumers had a nice bounce, led by Coca-Cola
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PowerRating). And the market continues to trade sideways, with a slightly positive bent. We continue to look for more of the same.