A strong rally in late June has all but been forgotten as the markets have closed red 12 out of the last 17 trading sessions (13 out of 17 in the Dow’s case). While it is easy to point out why this may be, be it bad fundamental data, debt ceiling drama, Europe drama, etc… we’d rather focus on the here and now. The bottom line is, is right now the markets are at a key point technically and there are some critical levels you should be monitoring.
The S&P500 continues to straggle its 200 day sma (simple moving average), piercing it for the 2nd day in a row but yet still managing to close above it. A close below this key moving average hasn’t occurred since September 2010. In the event SPX loses its 200 day sma, all eyes will be on the March & June lows around 1,250-1,260. It is worth noting that those lows coincide with a trendline off of the March 2009 bottom that has yet to be violated. A break below 1,250 would void this trendline for the first time and likely pave the way for further downside. As for upside, stabilizing right around current levels and starting to trade sideways will be the first sign that SPX is reversing out of this recent downtrend.
After some abysmal economic data on GDP and manufacturing the last few days each macro report will be under more scrutiny. Reports on personal incomes and spending, as well as auto and truck sales for July will be among those reports analyzed closely on Tuesday. Pfizer (PFE), Archer Daniels Midland (ADM), Marathon Oil (MRO), Marathon Petroleum (MPC), Coach (COH), General Growth Properties (GGP), Hyatt Hotels (H), Sirius XM Radio (SIRI), OpenTable (OPEN), and ValueClick (VCLK) are slated to report earnings.
We’ll be watching International Star (ILST) this morning as the company out news yesterday after the close. From what we can tell this is the first time the company has put out news in a long time. We’ll be watching for a break of $0.02 on above average volume to trigger a potential buy signal. Other penny stocks we’re watching are PGIE, CXLT, DIII, LFBG, GAMR, SNGX, & BLOAQ. CLSN, BDSI, SAAS, & CBOU are a few lower priced stocks we’ve identified as having constructive chart patterns during this period of market weakness.
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