Coolhand's Market Analysis

Just when the charts were starting to recover from their lows a few trading days ago, a post OPEX decline hits the markets as a result of more headline shock.

Specifically, weakness overseas set the initial tone over continued concerns centering on debt restructuring for Greece, Ireland, and Portugal. Then, on the domestic front, news that analysts at S&P lowered their outlook on U.S. debt to Negative hit the wires. The U.S kept their AAA rating, but the shot over the bow rattled investors nonetheless. I don't know why though, as it certainly wasn't an unknown that we have debt problems. It's been front page news for weeks, if not months. But it was post OPEX and the news served as a reason to take profits.

Earnings reports were decent enough though, as upside earning surprises from Citigroup, Halliburton, and Eli Lilly were announced. But positive announcements aren't translating into market gains at the moment.

Treasuries overcame early selling pressure to post gains later in the session, which would seem to indicate the U.S. debt announcement will have a very short term impact on the market.

The dollar posted a gain of 0.9% gain, which was mostly the result of a weaker euro, and this helped drive the I fund lower than either the S or C funds.

Not surprisingly, the Seven Sentinels have turned back down again, but do remain on a buy. Here's the charts:



Both NAMO and NYMO retraced much of last week's late momentum. They are now both back in a sell condition.



NAHL and NYHL also flipped from buys to sells today.



Both TRIN and TRINQ remain on sells, but TRINQ is suggesting that the NYSE is oversold so a bounce may be coming soon, but since TRIN is relatively neutral a bounce may not be uniform across the market. Assuming we get a bounce in the next day that is.



BPCOMPQ remains in a sell condition, but after moving sideways for the past few trading days it has taken a decided dip lower today and is getting close to that lower bollinger band. It's potentially an ominous sign for lower prices. If it drops below that lower band we could indeed be headed lower.

So all signals are back to sells, which means the system has issued two unconfirmed sell signals in as many weeks. But it's a tough call right now. Sentiment is (or was as of today) too bullish in many pockets, so some selling pressure is not a surprising thing, but too many negative headlines could help the bears get something going if the bulls don't take control quickly and/or sentiment doesn't get more bearish. But if there's one thing this market has been very good at, it's making moves quickly. In a volatile trading environment like this, anything can happen.