It's make it or break it week in the market and I think they will break it. Meaning that we go lower. Any bounce Monday back up into the 1080s is a fantastic selling opportunity. If we take out the 1060 lows from Friday I think its a solid reason to think we head back to the July lows of 1010 and blow right thru them with conviction to test the 979 area. That is a fibonacci target I have for the next leg lower based on the July rally. The market would have to get up and close above the 1100 level for me to change my bearish bias.
This week the econ data is quiet in the early part but everyone will be focusing on the GDP report released Friday. The following week is a bigger data release week as ISM, jobs report, and China PMI all come out ahead of Labor Day weekend. This is going to be an interesting last two weeks of summer as many people in finance are on vacation and volume is light. I dont expect any of this econ data to be good or bullish so it could be the catalysts for the next leg lower getting under way.
Sentiment got a bit more bullish on the AAII survey with 36% bulls and 31% bears. This survey has converged and even though its not tilted too much to a contrarian signal it is interesting that sentiment is overall mixed to slightly more bullish than it was in early summer even as the market had chopped sideways for 3 months.
Currencies- The EUR has broken its uptrend and looks very weak now breaking 1.27 this morning. I think this is just the start of the next leg down in the EUR and rally up in the DXY that should last for the next month or two at least. EUR could easily see 1.25 this week and eventually back to 1.22 in the coming weeks. The AUD is leading the stock market and looks weak for now as it pressures commodities lower. JPY is looking bullish as it just flags out and that could take USD/JPY to new lows in the coming weeks. Short foreign currencies into rips is the trade for now.
Commodities- Oil looks terrible since breaking its uptrend last week and is now down 10 bucks in two weeks. I think any bounce here is a short this week as crude looks like it wants 66. Copper is the only thing holding up the market for now I think as it flags out above support. 321 is the level to watch on copper on the downside. Gold is in no man's land but if it trades sideways and consolidates this week that would be the most bullish thing for that chart.
Buy the dips>> CRM, VMW, RNOW, GMCR, BTU, HOGS, JOBS, NTES, EDU, MCD, CMG
Sell the rips>> FCX, ISRG, RIMM, AAPL, GOOG, OIH, FXE, MA, QQQQ