Futures started off early in today's pre-market on a positive tone, but it was hard to sustain without help from the banks. The S&P 500 took out the recent pivot low of 1430-1432 (putting a low in around 1425). Within the past week, we’ve seen technical damage adding up, giving traders time to switch gears and get out of longs. If you are sitting in cash right now, there could be great dip buying opportunities over the next few trading days.
Right now, the market is just above a big support area, 1422-1427, a zone that also contains the 50-day moving average. That level on the S&P 500 has turned into a magnet ever since the Nasdaq broke its 50-day moving average last Tuesday. At this point, it’s probably a good spot to cover some shorts, but it’s probably not the time to put on additional longs if you’re a professional trader in front of your screen all day.
JPMorgan (NYSE:JPM) got an initial push to go positive after its gap down this morning, but was not able to hold those gains. The bank had a big run into earnings season, and it appears that stellar reports are priced into the stocks. JPMorgan beat on EPS and revenues, but still was unable to push higher.
Wells Fargo (NYSE:WFC) also beat on EPS this morning, but fell short on revs and is getting punished more severely this morning. Wells Fargo is down about 3%. Wells Fargo has been perhaps the most steadily performing bank stock over the past few years, but may need some time before heading back toward highs.