Balance Area; Russell $1,600 Supply Area; Stronger Selling; Buyer’s Non-Committal; Market Still In Uptrend.
Technical:
Broad-market equity indices digested prior advances, evidenced by the non-separation of value.
Recapping last week’s action, Monday's higher open on pandemic relief efforts coming from the White House was erased on a liquidation to Friday’s range. Buyers later responded, establishing a v-bottom before resolving the contract adjusted all-time-high, overnight. After investors shrugged off news of simmering geopolitical tensions, Tuesday’s U.S. session gave back all advances, liquidating enough to repair the poor structure below $3,330.
Alongside news of resilient fuel demand, relative strength shifted to the Nasdaq Wednesday, with equity indices squeezing shorts and erasing the low-volume area left behind Tuesday’s liquidation. Thursday’s overnight activity caught up to Wednesday’s divergent delta, drifting lower alongside uninspiring political news. During the U.S. session, the S&P managed to pop higher, to and through the resting liquidity at the $3,375 area, before testing lower and closing in-range, neutral. The session’s narrative carried forward with Friday’s session ending the week in-balance and range.
In light of dull participation, the risks of a pullback have increased. Buyers lack the conviction to follow-through and sellers are beginning to step up on the liquidations that get rid of those weak buyers. The Russell 2000 closed the week off lower after coming to the $1,600 supply area. The Nasdaq, despite regaining relative strength, failed to make a new high, balancing out into week-end.
To see a positive change in tone, there needs to be separation of value beyond the all-time-high. Until then, the potential exists for a fast-moving correction of the poor structure left behind by the emotional, momentum-driven participants.
Scroll to bottom of document for non-profile charts.
Key Events:
NY Fed Manufacturing; NAHB Housing Market Index; Building Permits; Housing Starts; Initial Claims; Philly Fed Business Index; Leading Index; PMI; Existing Home Sales.
Fundamental:
Senate leaves until September without coronavirus relief deal. bit.ly/3iN4FC2
Coronavirus vaccine won’t become widely available to Americans until 2021. bit.ly/2XRNfw6
U.S. retail sales slow in July; obstacles mount for nascent economic recovery. reut.rs/30XtDsA
Judge rejects a General Motors Company (NYSE: GM) case against Fiat Chrysler Automobiles N.V. (NYSE: FCAU). reut.rs/342xTJa
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Comment
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Dark Pool Index is Trending Lower*, not higher. My apologies.