Here’s Why I’m Watching The Banking Index


Stock index futures opened the new week with a small
gap
to the upside, mainly due to positive earnings reports and
outlooks, and merger news. In the absence of any economic news after the open,
sellers were ready out of the starting gate to take advantage of the gap open.
The selling was pretty orderly, but the main theme we saw again was any attempt
to rally was met each time with stronger selling pressure.

The March SP 500 futures closed
Monday’s session with a loss of -3.75 points, and finished in the lower 1/2 of
its daily range. Volume in the ES was estimated at 611,000 contracts, which was
behind Friday’s pace, and right at the daily average. Looking at the daily
chart, the ES broke its daily trend line support and settled just under its
20-day MA to barely confirm the double top with January’s high. On an intraday
basis, the 13-min chart was a good guide for 3 legs down, and aside from any big
news, we’ll be opening with a game of ping pong between 13-min support at 1139
and 60-min resistance at 1141.50.


The Semiconductor Index (SOX)
continues to flounder, breaking its 100-day MA and a head and shoulders
neckline. The Banking Index (BKX) posted an inside day and is sitting right on
its 20-day MA and daily uptrend line support. A firm break there could be the
“other shoe to drop” for a bigger correction. The VIX is eyeing its 100-day MA
resistance again, which it has been unable to hold on its previous 4 tries. The
Transports (TRAN) continue to bleed towards the February low at 2815 and a break
of that level leaves an air pocket down to the index’s 200-day MA at 2745.

Tuesday morning gives us the
February Consumer Confidence at 10 am ET. Estimates are calling for a slight
decrease to 92.0, from January’s 96.8. After Monday’s overall trend day down,
and the 4th red finish in a row, I’ll be looking for an oscillation range on
Tuesday morning, and a possible “relief” day, however, the way the pops have
started being sold makes me think the pressure still has a ways to go.



Please feel free to email me with any questions
you might have and have a great trading day tomorrow!

Chris Curran

chrisc@tradingmarkets.com