S+Ps have seen a two day rally, as Monday’s upside reversal saw upside follow through yesterday ahead of Amazon’s earnings. After the disappointment from Amazon and a decidedly downbeat report from financial sector bellwether Merrill Lynch, stocks got a real shove after a shocking energy inventory report.
S+Ps came in to the day with a negative posture as momentum (the bottom panel of the chart) gave a short sell signal. The technical catalyst for the selloff was a drop under yesterday’s low/Fibonacci support at 1510. Current support is 1506, with 1500 the first target. A drop under 1500 could lead to a retest of Monday’s low of 1492.50. A rally back over 1510 would takec the heat off for the bulls.
