Intraday Market Commentary From Stifel Nicolaus - August 23
From Stifel Nicolaus' Elliot Spar
The opening rally gave way to sellers even after the stock index futures took out Friday’s high. The SOX struggled and the good feeling from “merger-Monday” wore out its welcome. When an opening gap gives back more than half, it doesn’t sit well with traders. The downside move took the NDX futures to just above Friday’s low while the Spoos held 5 above its respective low. We got a bounce which has led to the NYSE a/d to sneak back into positive territory by 200 issues. Many are searching and wondering what the catalyst will be to get the buyers back into the market. Some of the biggest trading rallies have started without any catalyst at all. Once a trend line level is breached or a 50 or 200 day moving average is taken out, it can attract buyers. All of a sudden money managers find themselves lagging and they have to put money to work. The first step to getting this to play out will be the market’s response to this weeks’ economic data. Watch the market’s response to data not just the data itself.
INDEX IN FOCUS
PHLX Semi-Conductor Index SOX 1 324.65 (- 3.25)
So much for Friday’s out performance. This morning SOX failed at Friday’s high and now looks like it wants to test 319 support.
NASDAQ 100 Volatility Index VXN 1 26.21 (+ .45)
A 17 point pop in the NDX futures this morning couldn’t drive the VXN to the downside; an early warning that the rally was suspect.
INTEREST RATE IN THE NEWS
10 Yr. Treasury Yield Index TNX 1 26.12 (- .17)
Many traders continue to look for a top in bonds and a bottom in rates. Technically speaking, if TNX has a key reversal upside day or a close above its 10 day moving average at 26.55, I expect a sell off in the 10 year. Down trend line resistance at 29 would be the best case target without a significant change in economic data.
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