Was last Friday’s price action a game changer?  Likely not entirely but it does lead us to rest with one eye open.

From a pure price action point of view what to0k roughly 2.5 days to accomplish on the up-side in the first half last week only took one day (Friday) to destroy again.  Yes it was on the back of notably two weak earnings reports as well as an options expiration day, however the price action cannot be discounted.  So the S&P remains trading in our trusty 50 handle trading range of 1425 – 1475.  Support levels are 1420, followed by the 1390 – 1400 range.  Just like with individual stocks however, a large one day sell-off like the one we had last Friday, there often is follow-through in coming days.  As such we soon again be forced to buy puts against our bucket 2 long positions.  Such are the joys of a trading range.

On the other hand the dollar index sits at a precarious spot.  Should it break below the 79 level it may target around 77.50, which given the inverse correlation to stocks and other risk assets would likely lead to higher stock prices.

As an aside note, China (Shanghai Composite) has worked nicely off its recent bottom and looks to have more room to the upside.

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