The market made a statement on Monday. After a big risk-on move last week, the market made a hard turn towards risk-off on Monday. It is just one day, but a bad week would likely suggest that the medium-term bullish signals seen over the last two weeks have been negated. The Euro led things off with a massive decline that erased last week’s gain. This triggered trendline breaks in the US Dollar Fund (UUP) and 20+ year Bond ETF (TLT). Stocks and oil weakened, but did not reverse their short-term uptrends. It is a big week on the reporting front and any disappointments would further Monday’s risk-off mood.
The S&P 500 ETF (SPY) broke upswing support with a gap down on the open. After stalling most of the day, the ETF moved sharply lower in the final hour. The combination of a weak open and weak close indicates that buyers were not willing to step in after the initial drop. Overall, the rising blue channel remains in place to capture the short-term uptrend. Key support remains at 122. The swing within this channel is down with resistance marked at 128.