S(tuff) Off The Bottom

The general rule is that when the laggards stop falling, the markets can bounce. Laggards have been Retail, Housing, Energy, Financials, Materials and Biotech to name a few. The junk has bounced and now we are entering another one of those times for a potential reversal of trend.

A move above 1,130 by SPX sets up another one of those triangle patterns that have worked so well in Energy in June and SPX in July. SPX is now about 2% below that 1,130 -1,140 zone. The key over the next few days is a pop into the 1,130 – 1,140 range for SPX.

If the SPX consolidates in this 1094 – 1115 zone for the next 5-8 days and works off any Short Term -Overbought condition, then it is possible that the SPX could trade higher into the Sept period before a significant reversal, but that is the least likely scenario.

The potential reversal pattern is setting up for the S&P 500, Dow Jones Industrial Average, S&P Mid Cap 400, Russell 2000 Small Cap indexes. It has already set up for Transports (IYT), Materials (IYM), REITs (IYR) and Consumer Staples.

GE, JPMorgan and Wells Fargo also have the setup forming.

I am not telling you that the market has topped. I am not telling you to go sell or short a bunch of anything. I am simply showing you what I see and what I look for.





Here is resistance and support, with key dates on the S&P 500 Futures. Resistance clusters in the 1,122 – 1,134 range.



I mentioned a few weeks ago that it looked like Gold was topping. Gold, Gold Stocks and Silver have all had a rough few days, but Gold is now into support ranging from 1,156 – 1,133. Maybe we are setting up for a Long Gold/ Short Stocks trade. We’ll see how things turn out.