Resitance Lev

SPX: has recovered 2/3 from its lows suggesting upside move reward is limited. While 1300 remains key resistance level especially with high reading in the open interest data.

1297 finish slightly below with option expatriation coming up. Rather short Friday and thesis seems back in gear.

Beta related themes: Have been deeply oversold and about 1/3 recovery from July lows. Example includes Russell Small Cap where less liquid names have underperformed.

Given that data, the sideway market action continues despite strong argument from bulls the past two days.

Markets remains oversold especially given the intermediate-term moment data. And near-term entry point is not that attractive.

SOX- has been so beaten up, potentially opening up an opportunity for an upside move back to the 200 day mva.
Same theme in OSX, other tech related themes, Small Cap- less liquid names and beta related themes.

Brokers and gold related themes looks attractive among the beta themes but will be looking for shorts.

Defensive themes:

Staples breaking out CPB, GIS, KR, SWY, K , CVS, WAG, PEP, CL, TAP, CSG and UST.

Banks pulling back but holding in for the most part.

Select Pharam: MRK, FRX, JNJ, KOSP, and ABT. PPH- continues its run.
Utilities continue to work in the near-term: DYN, WMB, AYE, AEP, CNP, CMS, D, EIX and ETR.Others include: FPL, PCG, SRP, RRI TXU and XEL.
Tech that stood out: BMC, ORCL, INTU, FISV.Media: not as strong and not clear if defensive. CMCSA and CVC- leading the pack.
Telco: CZN, TWTC, Q, and VZ- working. Other parts are mixed.

Mid August Gameplan

Time to press on credit related and broker shorts themes. NEW, CFC, TOL, FED, etc.

'Pound the table' on these shorts while the market continues its consolidating phase.

Begin to plan ahead for potential rate cuts in the upcoming winter.- An inverse behaviour of long/shorts in current state.

Two questions: Gold as shelter play and value bargains of US retail and technology names.

Soft landing economic expectations can be miscalculated. Truth yet to be realized while overall consensus has stuck to that story.

Overall, bearish view might have been triggered in thoughts of traders/mangers making it actionable.

Geopolitical tension can be an additional contributes to a slowdown in equities.

Finding Misplacing of overbought names is a difficult screen given correction since May. - Since amost groups have corrected

So shorting the weak is the right approach despite the beaten up levels and value trap is worth avoiding especially at this junction of the macro outlook.

Market timing is more critical than stock picking due to a cycle shift in markets. Rising oil prices, rate factors and weak economy. Housing and labor all contribute to grim periods ahead but markets think ahead so the timing of both has its disconnect. Elections can trigger a nationalistic moment of reflection which can lead to investor reactions.