This is the SPY chart for today. Looking at the chart, the low support held last week and this week it has rebounded to a minor support area. The next big test as shown on the weekly is the resistance level on the daily charts. I believe that it may touch that level and then during earnings season things may fall apart and may go lower. These are approximate levels and one needs to look at it as a region. If it falls below today's trade, I will look at a short position in the market.
Few things that stand out in this earnings season and the things that makes me a bit nervous on the overall health of the market are as follows:
1. The China slowdown
2. Job cuts being announced by many companies has started
3. Earnings projections are weak and analysts are lowering the forecast for the quarter
4. Market just tested the Dec 2014 levels.
5. Auto sector has slowed down
6. CAT and FedEx projections are lower
Housing is at the all time high, interest rates are 0 and huge debt levels. The FED has less ammunition to do something when things go south...
These are early indicators that something might happen in the economy, but as we all know, it takes 6-9 months before it becomes officials.. These are some of the early indicators..
Time to be cautions and to book the profits....
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