Why are we being tortured by the market? It is like the weather in Florida, if you don’t like it, wait five minutes and it will change. That aside the chart below of the S&P 500 index shows the support near the 1305 level and the test on Monday. The bounce on Tuesday could be near term support and a higher low off the June 4th low. If true the bounce would need to establish a higher high on the bounce to create a new trend short term. I am thinking a move in the 1390 range would fit perfectly into the current movement or cycle of the market activity. As with anything the challenge comes in taking action. The current volatility of the broad market index is enough to give you indigestion. The setup for a swing trade with SPY is in place and worth watching to see how it develops and look for the opportunity. The trade is laid out on the Watch List for the entry, stop and target.
If the S&P is to move higher it will need the financials to take a leadership role in doing so. XLF is doing just that on the day. The consumer is doing their part as the confidence data pushed the sector up 1.4% on the day. That is a solid bounce for XLY off support as well.
The NASDAQ has done the same test of support at 2830 and established a higher low. A move back near 3000 would be a reasonable move for the index. If it is going to make the move watch technology as the catalyst for the move to the upside. If today is any indication for the index to move higher the technology sector is lagging the broader index by half. Not a good sign for the upside.
The move in the S&P 500 index is the better opportunity short term based on the charts. As with any trade opportunity, be disciplined and manage your risk accordingly.