Good morning traders. Yesterday I wrote that “I will be watching XLF and OIH as market tells; we need to get some more sectors involved if the rally is really going to have some legs in it.” Indeed financials worked as a very good tell. Its very important whenever the market is a major inflection points that you understand what components are leading and laggings as these are where you should be focusing. I saw the rally was most probably going to fail when the financials showed no upside momentum.  I looked to short the sector showing the greatest relative weakness. I was able to find that the agriculture stocks were really lagging by quickly by looking at the relative weakness scan on the SMB Radar.

For today’s action I expect the market to test the 114.60 area to the upside. If we fail to hold above it I will be looking for some continuation to yesterday’s decline at least to 113.60.

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SPY levels:

115.15

114.60

113.60

113.20

112.60