Resistance Holds. Losses Accelerate in Early Trading
Several individual stock trades stand out now.
Follow @MrTopStep and @BretKenwell on Twitter and please share if you find our work valuable.
Our View
Do you know what the biggest rally killer is? The Fed talking about rates over 5%. As earnings shrink and more and more layoffs hit, it's going to be hard to keep a positive face about the economy.
Remember, the stock market is a forward-looking and discounting mechanism. At some point, it will price in lower rates. But with the Fed talking about raising and maintaining “higher for longer” interest rates, combined with a deteriorating economy…well, that’s a concern.
The ES rallied almost 250 points from the Dec. 22 low and then dropped 90 points from yesterday’s high to the session low. Accounting for Globex, the ES has fallen 120 points in less than two days — Half the rally, gone like *that.*
Today we have another batch of earnings, eco reports and Fed speak. The latter two are down below in the Economic Section, while we’ll get PG and some regional bank earnings before the open. NFLX is after the close.
Oh yeah, and expect plenty of debt ceiling headlines today.
Our Lean
We were right about selling the early rallies, but the buy the dip stuff wasn't. It has worked for several weeks, but that trend changed yesterday. Wednesday was another great example of how fast a Fed headline can change things.
The PitBull had a negative bias yesterday and bought puts early, but was amazed at the late afternoon chops.
Our Lean: