Where Have All the Buyers Gone?
Good Morning. Today the market will focus on the 9:00 CST release of the June Single Family Home Sales which is expected at 880,000. Other news of note will be the markets’ reaction to GS and their 40mm share secondary offering that was priced last night at 99.75. There are no scheduled speakers on the docket today.
Ahead of the opening bell, the SPU is trading off -1.40 at 1446.10 on light volume. In general, the trade over the past two sessions has been lethargic with few standout players involved. However, it is worth noting that our bounces have been very weak after such a strong selloff. We think there is too much complacency in the market at this time. On the other hand, Friday’s NonFarm payroll report should provide the ultimate clue for direction into mid-September.
For today’s session, we have resistance between 1451-1455. If we can get above this zone, it should lead to our next resistance zone of 1466-1468.50. On the downside, we have support between 1444-1447, again for the second straight session this area produced the largest amount of recorded ticks traded. Below this level, support can be found between 1439-1437. If this fails to hold, look for a move to 1425. Below 1425, 1415-1414 is crucial and the next target. The market has acted very well below 1420 previously, and we do not think this trend will go away quietly.
The NDU is trading off 13.50 at 3566 on light volume. All told, yesterday was a session to forget for the bulls, as the market failed to build on Monday’s gains. Money was seen flowing out of the tech sector towards old economy issues all session. For today, if we can get above resistance between 3570-3578, look for 3620. Above 3620, we have resistance at 3650. The zone between 3650-3670 will be crucial for the remainder of the day — if we can settle above this zone, we should hit 3800 this week. On the downside, 3550 is the first key, below this level, look for 3520. Below 3520, we expect sellers to get aggressive and move the market to our support zone between 3471-3460. Below 3460, look for 3380.
In general, we are looking to be involved on the short side of the market today. We feel the bounce attempt has been weak. However, we are not expecting wholesale selling, especially in front of Friday’s report. This leaves the market in a quandry. Because of this, we expect a range within 1 Standard Deviation with selling rallies being the best strategy. Our morning pivot zone is between 1447.50 and 1449.