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Modest Corrective Tilt In Equities Might be Short Lived

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Chart-595US equity markets were under pressure early on today because of sagging Chinese economic views and weakness in technology shares yesterday. With renewed Chinese slowing fears, weak commodities and soaring gold prices the outlook for stocks today has downshift and a long string of positive closes is at risk. The US economic report slate is somewhat thin today and therefore the markets might be expected to take some direction from US corporate earnings which are expected from Dick’s Sporting Goods ahead of the Wall Street opening.

S&P 500: The E-Mini has already violated a 5 day old up-trend pattern but taking out the prior two session’s lows would seem to allow for a deeper slide to 1974.75 in the March S&P contract. Slack Chinese trade results and initial weakness in crude oil leaves the bear camp with a headline edge to start today. It is also possible that an Iranian missile test and increased air strikes in the Middle East have fostered an added layer of geopolitical uncertainty. A normal correction of the February and March rally projects a possible setback to 1880.80 but closer in consolidation high support is seen down at 1905.

Other US Indexes: The 5 day winning streak in the Dow looks to be ended today as early weakness is accompanied by distinct disappointment toward Chinese trade activity and initial damage on the charts. Near term downside targeting in the March Mini-Dow is seen down at 16,858 and to reverse the negative tilt this morning probably requires a rally back above 16,987. While the Mini-Nasdaq saw definitive chart damage overnight the March contract has managed to regain the potentially critical 4300.00 level. In fact, there would seem to be a no-man’s land on the charts between 4293 and 4276 and therefore we feel the March Mini-Nasdaq needs to respect the 4276.50 level to avoid a sustained corrective slide.

TODAY’S MARKET IDEAS: The bear camp starts with control but we don’t get the sense that a widespread rout is in the offing as there doesn’t appear to be a large amount of fear in the air. The markets were overbought and a sudden deterioration in tech sector stocks, fresh concern toward Chinese slowing and weaker oil prices leaves the bias pointing downward. Near term targeting in the Mini-S&P is 1974.75.

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