Not much of note today, as we saw a very lazy summer trading day. Are some fireworks just around the corner?
Some thoughts for the rest of the trading week:
- NYSE decliners led advancers today by about 2 to 1 (Source: Seeking Alpha) – a sign of things to come?
- Earnings season is kicking off – it’ll be interesting to see if fairly bullish expectations are beaten. I’m thinking they are probably too high – we’ll see.
- I’m glad we covered our last short contract over a week ago at the 1026.50 (September E-Mini S&P futures)! I hated the decision at the time, but felt like it was the right thing to do with overwhelming pessimism around.
- When this rally covered back about half of the losses, I went short again at the 1068.25 mark. Obviously it was too early, but I felt that the risk/reward was favorable (See: Why I Can’t Wait to Short the S&P 500 Again)
- This mini-rally has again seen weak and declining volume. I know it’s summer, but we are seeing less volume on rallies than we are on declines (see chart below).
- As mentioned last week – we’ve retraced about 50% of the last decline. Optimism may not be “back”, but it’s at least out of the gutter. So while we could see a further rally from here, it’s not required. The stock market could turn back down again at any moment.
- And don’t forget – we are still below the 200-day moving average on the S&P (red line below). When this condition exists, you’re usually best off being either short the market, or out of it.
Base chart courtesy of StockCharts.com (with my pretty edits)