Stocks are still lower as they started, but they are off the lows having made a slow, steady recovery all session long. No major bids, but the key is that, at resistance, there is no harsh selling. The sellers are not attacking; it is like a lack of bids thus far.
SP500 -12.34, -0.48%
NASDAQ -55.80, -0.80%
DJ30 -75.58, -0.32%
That does mean no stocks are up. NVDA, LULU, OKTA, TWLO, FB all post solid gains and indeed we are looking at FB, TWLO, NVDA as entries even with the indices at resistance.
Even so, the softness has brought out sell calls and those will be key -- not so much in terms of the words but the actions of the big funds and managers -- as the week progresses. Morgan Stanley put out a note that SP500 2600 to 2650 is a good level to 'start lightening up" ahead of what it sees as likely a "period of negative news flow on earnings and the economy." Well, we have lightened up on the way up as you know. We are encouraged, however, by the still very solid tests the early rally leaders are making as well as some good moves as noted even as the overall market continues the near term test.
Weakening up a bit toward the close. Today has not answered the question of next direction, thus far still keeping alive the notion of a test that refreshes and starts a third leg upside. That has to overcome the technical issues, however, so this recent test, while looking good, needs to show more stocks breaking higher. Again, however, there are a few stocks we have plays on that look solid and we will see how this late weakness impacts them and may go ahead and pick up at least some position on them.
Jon Johnson, Chief Market Strategist
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