Stock bears not thrown by head fake amid correction

(CME:ESH14) - Bears Remain In Control "If We Close Below Yesterday's Low:" Equities began the much anticipated correction in yesterday's session as the S&P reached a low of 1809.50. The market did give traders a head fake early testing the Sunday night session high of 1838.75 with a failed high of 1838.25. The S&P failed and was able to pick up steam as it broke through previous lows at the 1825-27 level. The 20-day moving average, which has been grinding higher, was taken out in its close proximity and provided further momentum to the downside. We have not seen a new low this session as the S&P is nearly 10 points off from that of yesterday. The 20-day moving average comes in at 1820.75 and will act as resistance on today session, a close above here will negate yesterday's selloff. Goldman Sachs announcing that they felt the equity market was overdone played a role in yesterday's selloff. However, traders and investors must take what they say with a grain of salt as they may even use this selloff as a buying opportunity. Poor jobs data followed up by continued support by Fed President Dennis Lockhart to continue bond purchases had many traders looking to take profits and protect gains. Retail sales will be closely watched this morning followed by two Federal Reserve Board Members to speak this afternoon.

Resistance - 1820.75**, 1825-27***, 1832.50*, 1840.75-1842.50***, 1853***, 1893***

Support - 1809.50**, 1800**, 1793.50**

(NYMEX:CLG14) - Market Ready For Feb Option Expiration: Crude oil followed equities lower in yesterday's session but could not break last week's low of $91.24 with a low of $91.43. Today's session also has followed with a higher low of $91.50 and has followed that print with a high of $92.33. Currently crude has fallen back into the middle of this range. The market has struggled to hold gains as traders fear more supply hitting the market; increased output from Libya and exports from Iran. However, tomorrow is February option expiration and could keep the market in check until then. Only a close back above $92.33 and furthermore major resistance at $93.20-$93.46 will signal a trend reversal. Poor jobs data from Friday will not help an oversupplied market, but it does decrease the value of the dollar, which has had a hand in keeping oil in check; look for a dollar above 81 to put further pressure on crude.

Resistance - 92.33-92.38**, 93.20-93.46**, 94.59*, 95.13*, 95.73***

Support - 91.50*, 91.24**, 90.05***

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Rich Ilczyszyn

Rich Ilczyszyn is Founder and Chief Market Strategist of Rich excels at creating dynamic trading strategies for clients that establish solid positions, while remaining flexible enough to capitalize on market opportunities when they arise. By identifying market trends, breakouts, and failures in a timely fashion, Rich presents clients with the opportunity to realize their objectives while effectively managing their risk.

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