March Retail Sales were 0.3%, well below expectations (consensus 0.8%). Retail Sales-Ex Autos came in at 0.1%, also below expectations (consensus was evidently revised up to 0.6% from 0.4%)... In response to the data, Treasurys have rallied, as the 10-yr note is now up 6 ticks yielding 4.32%.
Not surprisingly, stock index futures dropped on the news, and the markets will gap down at the open.
Earnings news last night and this morning were mixed, with several warnings and downward revisions interspersed with higher than expected EPS. Overall, earnings were probably a wash.
If the markets close down today, that will represent yet another recent example of lack of follow-through in market rallies.
Specifically, since the beginning of March, there were only two instances out of 8 possible where we saw two consecutive hollow body candles (25%). Today's close if down will make that 2 out of 9 (22%).
In contrast, during this same time, black candles were followed by one or more consecutive black candles 7 out of 8 times (87.5%).
As you know, uptrends are characterized by evidence of follow-through. Yet we see precious little evidence of this, which is consistent with my interpretation that we have not seen the bottom of this medium-term correction yet.
I agree with you that it is quite possible (considerably less so following today's news) that QQQQ might try to rally halfheartedly up to the heavy resistance beginning at about $37, but after that, all indications show that we are looking at significantly more downside, ultimately down to $35 or perhaps even lower.
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