What Has Finally Sunk Into The Market’s Thick Skull

Stock index futures opened Wednesday’s session sharply
, despite higher crude oil prices and lowered earnings guidance
from CSCO.  The futures hung tough for the first hour, with no inclination to
fill any of the gap, and saw a pop to new session highs after news of a surprise
build in crude oil inventories.  After a tight range through the lunchtime lull,
a sharp ramp up in crude oil spoiled the party (or at least that’s the excuse I
kept hearing), with help from the 10-yr. note yield.  Breadth started out like
gangbusters, and although it blew a gasket in the final hour, it never did go

September SP 500 futures finished Wednesday’s session at the flat line, while
the Dow futures posted a small loss of —8 points, with both closing in the lower
½ of their range.  Looking at the daily charts, the ES posted a spinning top,
with the YM posting a doji.  Both contracts posted a large upper shadow, which
usually indicates trapped longs, and were unable to settle back above their
20-day MAs.  On an intraday basis, failed 13-min bullish Gartleys have turned
into inverted cup and handles, but could be setting up Butterfly reversals.  For
you daily 3-Line Break followers, the ES remains short with a Break Price of
1247.75, while the YM remains short with a Break Price of 10717.



morning gives us the July Retail Sales report at 8:30 ET.  Estimates are calling
for a 1.0% gain and a steady 0.7% gain in the ex-auto numbers.  With earnings
season pretty much a foregone thought and little economic news the rest of the
week, the crude reality (no pun intended) of the consequences of higher oil
prices may have finally begun to sink into the equity market’s thick skull.



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