Market Snapshot 07-09-2015

Use the following table for a quick measure of the markets over a variety of different time-frames.

Click the image for a better view…

MarketSnapshot07092015

 

The VIX remains in a bull trend across all time-frames. This does not bode well for equity market bulls. However, the VXX is also the most overbought market from our list which suggests that we are likely to see a fall in volatility at some point in the next few days.

With the exception of the Consumer Discretionary, Homebuilders and Biotech sectors,  all of the major equity market sectors have transitioned to longer-term bear markets.

Having said that, utilities are severely oversold and the ferocity of the recent selling has meant that the energy reading has dropped to a particularly low level (less than 30). This suggests that XLU might find a bit of support this week.

SMH (Semiconductors) is the most attractive sector to look for shorting opportunities. A close below $47.69 would add conviction.

Other notable extremes are the number of recent distribution days in IWM. The Russell2000 ETF led the SPY lower in July when it started making a series of lower lows (and it will likely lead the market higher again).

If we are going to confirm an equity market bottom, we will first need to see some strength in the IWM (preferably supported by strong volume).

As for market breadth, only 30% of Russell3000 stocks are now trading above their 200 day MA. This is a 6% decline from a week ago.

With the above said, it is worth pointing out that the energy reading of most markets is incredibly low. This indicates that rather than more extreme selling, we are more likely to see a period of choppiness while the market discovers the edges of a new range.

For the shorter-term trader, this will present opportunities for both long and short positions (with the obvious bias being to the short-side).

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