Futures are down this morning as the selling from Friday continues. Below are some key levels to watch to determine where this market may go. But to summarize what is below, we have the dollar breaking above long-term resistance at 83.67 which is bearish for the market. It gets more bearish if DX breaks above 83.98. XLF which has crapped the bed over the last few days is pulling the market down and must hold support at 14.26 if the bulls want any rally in the market. TLT has broken out and as long as it stays above 130.61 it is bearish for the market. As for SPY, it must hold 134.85 which it touched in the pre-market. Overall the market will start the week off on a bearish note but if SPY and XLF hold support, there is a chance for a reversal, if not SPY at 132.60 is a likely possibility.
SPY: The oval highlights the must hold level for the bulls and potential bouncing point for the market if it catches a bid. Why this oval is so important is because all the levels that meet today, there is the uptrend from June, 134.85 support level and the 70 day ema. If SPY breaks below this it would negate much of the support that has held this market up.
XLF: XLF broke down on Friday and was trading lower over the last few day we noted this on Thursday as XLF neared the apex on its triangle which it broke on Friday.
Warning to the market: Keep any eye on financials as they tend to lead the market. The lack of confirmation from financials during the latest run up is troubling. If XLF manages to breakdown the overall market should follow and if it breaks out the market should rally. But with XLF at its apex it is very possible we will see a move today for financials.
XLF did breakdown and broke below its uptrend from June. As of this morning it is trading near big support at 14.26. A break of this level and its back to the June lows for XLF. This would also put pressure on the market.
Dollar: It ripped up on Friday after bouncing off support at 82.88 moving back above resistance. This week we see the dollar opening up above big resistance at 83.67 and touching the yearly high at 83.98. Watching the dollar will be very helpful in seeing where the market goes.
Dollar Above 83.67 = Bearish for Market
Dollar Below 83.30 = Bullish for Market
TLT: This morning we are seeing TLT breaking out of its range and trading above 130.61, again more bearish implications for the market as the flight to bonds continue. This a strong breakout out of a range and if we are using TA we could at least see another 2% to 4% move on TLT. TLT above 130.61 and 130.39 is bearish for the market, below these levels and it doesn’t look to bad for the market.