Prior to this morning’s open, yesterday’s swoon was a memory of the past. European markets were higher, and U.S. Futures were all up significantly into the open. However, this rally was short-lived, as the 9:30 open marked the highs of the day on S&P 500 futures. Since then, stocks have sold off sharply and are only modestly off their lows of the day. Currently, the Nasdaq is today’s relative laggard, off about 0.5% for the day, with all other indexes about 0.3% lower. After yesterday’s big rally, bonds are weak again today, about 0.9% lower, while gold and silver are each about 1% higher.
CHART OF THE DAY
Lowes Cos (LOW) – The home improvement company has been on a tear so far this year, up nearly 20% since January. The shares recently broke to new all-time highs and have since consolidated back near their 50-day moving average. This trendline has guided LOW higher for most of the year. Despite its strength, sentiment toward LOW remains skeptical. Yesterday, LOW saw a glut of put buying, and short interest on the equity has more than doubled over the course of the past month. Going forward, this creates unwind potential, and could act as a tailwind toward the shares.
I like a long entry here with a stop on a close below 40. I would initially target a move back to 43, with 45 as a stretch target.
WHAT I’M EXPECTING
A retest of the 1600 level on the S&p 500. Markets broke below yesterday’s lows early this morning, and things aren’t looking much better at the present time. Should last week’s lows of 1598 give way, we could see a very quick move down to 1575.