Bulls don’t want to see this trendline broken.  New low Ticks but none less than -800.

Got the Globex range breakout but no short covering yet…Also, 941.25, the new highest price point of control could still serve as resistance.  As we write, the ES has not been able to take out 940.00.

Marty Chenard points out that the KBW bank index (orange) was at trendline support this morning that needed to hold for the financials to keep afloat.  We also add that the Nasdaq Bank Index is at resistance, which has held it from advancing several times since April.  A breakout could finally take the S&P up with it.  Conversely, a failure could take the S&P down.  Symbols to watch are $BANKX and $KBW in TradeStation.

The 76.4% of the Globex range has not held.  Locals in the S&P pit are caught short from the 933 area where they sold on the open and again on the way back up.  As we wrote in the morning report, Globex highs of 938.75 are the 61.8% retracement off Monday’s highs and yesterday’s lows.  If it does not hold, we will see a lot of short covering.  Accordingly, this is a critical time and area for both longs and shorts.

Top 7 losers in S&P 500 are all in services-retail, with other losing sectors being health, services overall, and consumer cyclical.  Winners are in financial, tech, energy and capital goods.  Aside from the services selloff, this is a bit bullish as defensive stocks are being sold and recent leaders are being bought.

Early action and market internals are suggesting a range-bound day.  Overnight support has just been broken, so we would not be surprised to see yesterday’s 922.50 low tested.  923.75 should be the reversal point if the low is respected.  Should the market rebound, shorts will enter at 933.25 (also close to VWAP).  On a non-trending day, we also consider the 76.4% retracements as support/resistance and so, shorts do not want to see 936.25 exceeded.

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