Early Look: Stocks Bounce From Key Support

If you were up early enough to see the S&P futures before the open, it looked like the market was going to open lower again. But as the open of trading drew closer, the futures began to slowly improve. In the first hour of trading, the SPX came close to testing that 1120 level again but has since climbed back into positive territory.

Industrials, which have been hit really hard this week, are leading the early action. While energy stocks continue to lag here. The Nasdaq is outperforming the S&P so far also.

There hasn't been a lot in the way of market moving news this morning. Nike (NKE) posted better than expected earnings, and MCD raised its dividend. But there haven't been any economic reports to speak of.

Two times in August the SPX came down to test the 1120 level but held there. Yesterday and today (so far) the market has held those levels again. So it will be interesting to see if the market again bounces higher from here next week (into quarter-end), or if the third time down testing these levels is going to finally give way and we see a break.

Asian markets were lower overnight, and Europe is lower this morning as well. The dollar is lower today, but not really helping commodities much. Oil prices are struggling to hold the $80 level, and gold prices have pulled back further to $1675. Silver has also gotten hammered this week, and I am buying a little for a bounce.

The 10-year yield is bouncing a bit to 1.80%; and the VIX is only down -1.6% to a still high level above 40.

Trading comment: No sense making any big moves today. The market has been down a LOT this week, so it is normal to see some short-covering ahead of the weekend. But we are in that time period where there could be big news any weekend out of Europe, so I don't think many people are going to take big positions on this Friday. More likely, investors are going to square up their exposures, and try to be as flat as possible to minimize the overnight risk. Rest up, next week promises to be another fun one.

long SH, SLV