AT40Â = 43.8% of stocks are trading above their respective 40-day moving averages (DMAs)
AT200Â = 52.6% of stocks are trading above their respective 200DMAs
VIXÂ = 10.4 (volatility index)
Short-term Trading Call: cautiously bullish
Commentary
And just like that, the stock market made it even harder for me to keep a bullish bias on my short-term trading call.
Financials suffered a major blow when J.P. Morgan (JPM) revealed that revenue is down 15% in the quarter (excluding June). Bank of America (BAC) piled on by indicating trading revenue would be down year-over-year on tough comparisons. Traders acted swiftly and created serious and bearish technical damage.
JP Morgan broke down to a new 2017 low and a bearish follow-through on a head and shoulders (H&S) top.
Goldman Sachs (GS) not only made a new 2017 low, but it also made a bearish break through support at its 200-day moving average (DMA).
Somehow, the Financial Select Sector SPDR Fund (XLF) has yet to complete a bearish H&S breakdown
The Financial Select Sector SPDR Fund is the only thing preventing me from jumping all over shorts on JPM and GS…and implicitly becoming even less bullish on the stock market. XLF has yet to follow-through on a head and shoulders (H&S) top. I am watching this important indicator of market and economic health ever more closely.
Financials weakened the S&P 500 (SPY). Yet, after sellers failed to make fresh intraday lows from the first hour of trading, buyers closed out the final 90 minutes in a strong rush to scoop up “bargains.†It was yet another signature close for the S&P 500 that put the weakness of sellers on full display even as carnage raged in an important sector of the market.
The S&P 500 survived early selling to close out May within inches of its all-time high.
As a result of another implosion of selling interest, the volatility index, the VIX, flipped from an intraday 8.9% gain to a near flat close. The VIX thus stayed firmly entrenched at an extremely low level.
