We have bad earnings to blame for the 2 day pullback. Bank earnings have been weak and we got a bomb from WMT. And NFLX disappointed with their earnings. It has been a bunch of disappointments. As I stated before, in the comments a couple of days back, I would be a scale down buyer between ES 1992 and 1982. Well, I followed my own advice and got long ES.
This is a pullback you usually get to consolidate a big up move off a bottom, and these consolidations usually last about 5-6 trading days. If you consider that we got rejected by SPX 2020 last Friday, then we are on day 5 of the consolidation. We should get a move higher off this consolidation within 2 trading days.
We got a gap up today which seems a bit surprising considering the weak earnings after hours, but global markets remain well bid. China seems to have enticed dip buyers as there seems to be front running ahead of possible stimulus at a big meeting near the end of the month. They never make it feel comfortable to buy weakness, and with the weak retail sales numbers and the WMT and NFLX bombs yesterday, it felt like a mini armageddon.
Bonds are tough to game here, I am not touching it because I remain positive on equities but bonds seem like they have no worries in the world with the weak economic data and dovish Fed musings.
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