Markets were weak on today’s open, but the initial push lower was met with buyers near yesterday’s lows. Since then, equities have rallied back near yesterday’s closing prices, but so far have failed to retake them. Bulls are still present, but they’ve yet to steal the reins from the bears after Wednesday’s big intrday reversal. At current levels, the S&P 500, Nasdaq, and Russell 2000 are all about 0.3% lower on the session. Bonds are slightly higher, while metals are a little lower for the day. For the time being, the range on the S&P 500 is contained by yesterday’s range, which is known as an “inside day” by technical analysts.
CHART OF THE DAY
Autozone (AZO) – The auto parts retailer has been on a tear this year, up nearly 20% since the beginning of the year. The company recently reported better-than-expected earnings and rallied in a big way on that news. Since then, it has consolidated nicely back to its 20-day moving average, a trendline that has supported the stock in the recent past. This trendline could act as support going forward.
I like a long entry here with a stop on a close below 408. I would initially target a move to 430, with 450 as a stretch target.
WHAT I’M EXPECTING
Given today’s inside day and the long weekend, I’d look for a big move in markets next week. There is a fair deal of economic data set to be released, including the Case-Shiller home price index on Tuesday and GDP on Thursday. This recent down move should resolve itself, and a break of the past three days’ range will give us more clues as to which direction the next leg in equities will take.