The market direction outlook last night still looked like stocks might want to try a second rebound attempt. That attempt just didn’t have any breadth to it and volume is remaining predominantly trading down. The economy though is showing strength with another great Weekly Initial Unemployment Insurance Claims report. But now investors are focused on global events. The sanctions being imposed on Russia are seeing a reversal effect by Russia imposing their own sanctions. With the European Union already showing slow growth these sanctions can only hurt more.
Meanwhile there are rumors now of US airstrikes being planned for Iraq and basically there are now so many uncertainties that perhaps it is surprising the markets are not indeed a lot lower.
SPX Market Direction Intraday Chart for Aug 7 2014
Intraday you can see the problem the market is facing. This morning the rally was pitiful at best and the 1919 support level which has held up amazingly well for several days now, finally broke. The afternoon rally back failed to recover the 1919 level which brought in more sellers. 1919 was light support at best so it is impressive how long it has lasted. Who knows, perhaps a bit of good news tomorrow or early next week and we could see stocks try to retake it. However it is highly unlikely at this point.
1919 Was Critical Support
I wrote the intraday comments yesterday centered on 1919 and how it was critical support. With it broken the next support level is down at 1870. Meanwhile 1900 has its own measure for stocks which while not support is the marker for the bull market rally highs. You can see in the chart below that 1900 took quite some work to break through. Obviously the market is at the point here where once it breaks 1900, it will fall to 1870 before more support is found.
Outlook Into The Close
The best investors can hope for at this point it to be holding the Ultra ETFs or Spy Put Options or some similar instrument to protect and profit as stocks head lower. I am expecting the S&P to try to hold at least the 1910 level, but with tomorrow being a Friday, I would expect the market to be softer tomorrow. We could see 1900 break tomorrow. Again is geopolitical events heat up even more, we will see stocks fall quickly to 1870.
Internal Stock and Option Trades Links
Put Selling Strategies For Members
Covered Calls Strategies For Members
Profit And Income Strategies Index
Stock and Option Strategies For Members
Stock And Option Trades Explained For Members