After markets made new all-time highs in May, a historical period of seasonal selling, many are now calling for a “June swoon” on the heels of the recent May strength. Sellers are again in firm control of equities today, as stocks are off significantly from the day’s opening print. There was a good deal of economic data released today, and not much of it looked very positive for the economy going forward.
There’s not much constructive to say about today’s price action, as the open was quickly pushed lower, and stocks are only modestly off their daily lows. All major equity indexes are trading about 1% lower today, with the Dow Industrials today’s relative laggard, off about 1.2% at present levels. Bonds are seeing a bid today, up 0.8%, while metals are near breakeven.
CHART OF THE DAY
Michael Kors Holdings (KORS) – The luxury retailer has been very strong this year, up about 20% since January. The shares recently moved higher on earnings and are now pulling back to their 20-day moving average, a trendline that was former resistance and acted as support two weeks ago. The recent pullback offers a nice risk/reward setup from the long side.
I like buying KORS here with a stop on a close below 60. I would initially target a move back to 65, with 70 as a stretch target.
WHAT I’M EXPECTING
A short-term bounce from here. The S&P 500 came fairly close to my 1600 target today, and buyers will likely step in here and try to buy at support. I wouldn’t fall in love with this move from the long side, but there’s a nice setup for some short covering into Friday’s jobs report.