After the market closed, I saw a Bloomberg headline that said the S&P fell by 7.07%, weighed down by technology and banks. Clearly the headline was in error as the S&P closed down by 7 points. But all I could think of was, if the S&P had closed down by 7%, there surely would have been panic. Don't you think?
Alas, it was another day of total chop in the market. Well, except for the move in the utilities. Sure, I had expected we'd see them back off from the resistance at 700, but I did not expect a total give-up such as they have done. As you can see, they are now sitting solidly on support.
They have also been red for seven straight days. There is nothing magical about that, but it does imply they are now oversold while kissing support. Thus it's hard for me to imagine we won't see a bounce by midweek. The question really is how well they bounce. You see, a crummy bounce before the jobs report on Friday could set them up for a break of support if the report is good. Maybe that would give us some panic?
Nah, why would anyone panic over the utes? No one seems to care about them. I would note, though, that if the utes do break under 655 in a meaningful way, it does not bode well for the overall market. As we have discussed, in the short term it might not matter, but over time weak utes tend to lead to markets that correct.
If you think I am wrong on that, just note that the utes were weak from early to mid-July. In mid-July the S&P tagged 2175 and struggled. By early September, the S&P took a leg lower that essentially hasn't recovered the way folks thought it would.
Away from that, the transports finally pushed back to 8100. Of course, who didn't notice it? It's hard not to notice when it's the only group that has any decent upside action. I have been a fan of this group for a while, but I also expect that resistance you see on the left side of the chart will be a problem. My guess is everyone will focus on the breakout over the line I've drawn in and that 8200 area will be a short-term resistance zone. But overall I continue to like the group and the chart.
So for now, despite the erroneous headline from Bloomberg that would have given us a high level of panic in the market, we remain in the same chop we've been in for months.
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