If you’re looking to get a handle on this market, top trader Guy Adami says technicals are not to be ignored.
He believes the S&P’s close on Wednesday at 1341 is very telling. “We’re at the 50% retracement,” he says. “1422 was the recent high in May and 1266 was the June low.”
What does that mean?
“We’re definitely not staying here,” he speculates. Techincals suggest that “if the market can close above 1350 – then it should push up to at least 1366, a level which had been past resistance.”
However Adami isn’t so sure the S&P can power to 1350. “Yesterday we had an outside down day in the S&P,” he adds. "In other words, yesterday's high in the S&P was higher than the prior day's high and the low was lower and we closed lower."
That’s a bearish sign. "I'm in the camp that there's another shoe to drop," he says.
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Trader Josh Brown sees another troubling technical sign. “We’re seeing a pattern of lower highs and lower lows – that’s no good, either.”
And he adds that fundamentals also suggest the path of least resistance in the S&P is lower. “Right now the market is starting to digest Q2 earnings and estimates suggest 7 out of 10 sectors aren’t going to show expansion.” That too is negative.
What do you think? We want to know!
