Gives Up Early Gains as Momentum Fails

Wall Street almost always has some type of excuse for earnings to not be stellar, nor do they really care about forward guidance.

• The S&P 500 E-mini contract initially tried to rally during the trading session on Thursday, as we continue to see a lot of noisy behavior.
• There is a lot of trouble out there just waiting to happen, and therefore it’s not a huge surprise to see that we have nowhere to be.
• Furthermore, the biggest problem we have had this week at this point has been that we have almost no macroeconomic announcements of any significance, so we are simply killing time now, although it’s probably worth noting that we are in the midst of earnings season.

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Stock markets are crashing again

Wall Street almost always has some type of excuse for earnings to not be stellar, nor do they really care about forward guidance. Most of this is about liquidity and cheap money. There is no cheap money anymore, so it can be interesting to see how Wall Street comes up with a new narrative.

Market Has no Real Reason to Go Higher

In the short term, I think you continue to look at this through the prism of fading rallies, because quite frankly this is a market that has no real reason to go higher. It doesn’t necessarily mean that it needs to melt down, just that there’s nothing good out there that makes people want to go out and risk a bunch of money. Furthermore, bonds are paying a real return these days, so that works against the idea of taking risk in something like a singular company.

The US dollar strengthening has been a real problem for the S&P 500, as it will almost certainly cause a significant amount of damage to the exports of leading US companies, which of course are global. With this being the case, the market should continue to look at the 50-Day EMA which sits just above the 3800 level, so therefore I think it makes sense that the level remains the “ceiling in the market.” On the downside, the 3600 level continues to be important, as we have bounced from there a couple of times already. In the short term, I think we go sideways in this 200-point range, which is quite typical for the S&P 500 as it searches for this next move to show itself and have a reason for momentum in this contract.

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