EB Daily Market Report - Friday, July 19, 2024

Dear Members.

When we conducted our options Max Pain event on Tuesday, Tom Bowley made it clear that due to the imbalance of outstanding calls to puts there was a decent chance we'd see some selling into options expiration Friday. That has turned out to be the case with all of the major indexes continuing their move lower.

The selling is certainly understandable give the non-stop run the market has been on for an extended period of time. Throw in an historically bearish period and a VIX that has jumped substantially with traders choosing to move to the sidelines.

At least intraday, the S&P has dipped below its 20 day moving average, currently at 5532, the first time we've seen this since the end of May. So barring any buying into the close, we should err on the side of caution. Should the selling continue, there's both price and technical support just above 5400.

Of course things could look completely different next week when the earnings flood gates open, with thousands of companies getting ready to report numbers over the next several weeks. Expectations are high so we'll see if those expectations are met, exceeded or come up short and it is likely going to determine the near term direction of the market.

For now it makes sense to be less aggressive as we get ready to move into the weekend. Tom will provide his assessment on Monday when he issues his Weekly Market Update.

At your service,

John Hopkins