Market Alert - The Close

And the pullback continued. Indeed, now the indices are in that range where you either see some kind of bounce setting up. If not, the 3+ week rally's future is not bright.

SP500 -17.01, -0.81%
NASDAQ -46.11, -0.94%
DJ30 -132.86, -0.74%
SP400 -1.12%
RUTX -1.14%
SOX -0.52%

VOLUME: NYSE -1%, NASDAQ +3.3%. NASDAQ trade moved further above average while NYSE held basically steady just below average for the seventh straight session.

A/D: NYSE -3.1:1, NASDAQ -2.9:1.

NASDAQ s holding the 50 day EMA on the close. NASDAQ is the index that has the pattern that most resembles a double top. It is now at that key range it needs to hold to keep the rally working.

RUTX sold hard for a second session, closing at the session low. It is at the April high, just below the 20 day EMA, and 38% Fibonacci retracement of the May to June move. Rally leader, selling harder than most, at a critical level.

SP400 also sold hard and closed at the session low. It is just below the April peak and 20 day EMA. SP400 is also just below the 38% Fibonacci retracement. Important range to hold as well.

SOX gapped lower then rallied higher, only to close back where it started the session. Still holding over the December 2015 hihg and easily over the April highs as well as the 38% Fibonacci retracement that is near the April peaks. That means SOX is showing some relative strength on the pullback, but it can also mean SOX has farther to fall. Its pullback, however, looks pretty normal and orderly.

SP500 put in its second session of harder selling, holding over the 50 day SMA on the close. That puts it below the April high, but not in all that bad a position.

DJ30 Low volume as DJ30 closed just below the 50 day SMA. As with SP500, the Dow is not selling as hard, but has noted over the weekend, it also lagged on the upside.

The news was not good to start the week with China metrics missing and hitting lows seen 10 and 16 years back. It also felt it was time to again devalue its currency as a good, stable member of a reserve currency group should. Japan reported weak manufacturing. All of this to start an FOMC meeting week.

Oil stocks were volatile but held up overall quite well, e.g. SPN, ORIG, APC. Metals took a pause, e.g. AKS, STLD, NEM. Chips sold more but also are set up well to bounce form near support, e.g. MXL, AVGO, SLAB. Software is still holding up well, e.g. CYBR, RHT, BLKB.

We picked up some puts on FB and DIA to have active plays if the market keeps selling. Again, I state that as an if because even though the indices are down 2-3 days straight they are at levels where you start looking for a bounce if one is going to take shape.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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