9,500. That's our line on the NYSE.
We finished the day at 9,504 but the S&P failed to hold 1,925 and the Russell never made it to 1,940 so we can't call this 3 of 5 over the line which means we don't have a bullish rally yet – just a bounce off the lows which will quickly start looking like a dead cat if the Russell fails to hold it's weak bounce line at 1,000, where we have a long position on /TF Futures. Likewise, the Nasdaq 100 failed to take back 4,200 – another key failure for the week.
We never made the bullish marks we were looking for in yesterday's post, so game off for the long play we discussed and game on for some hedges if you don't have any (we favor SDS and SQQQ, as discussed last time we were this high). All four of our tracking portfolio are in fantastic shape (full review yesterday in Chat) and we discussed locking in the gains by going to CASH!!!, because we're at a very tricky inflection point and it's hard to protect but we decided to press on and we'll see if we can clear those bounce lines next week.
That makes today more of a watch and wait day with Asia finishing the week slightly red for the day and Europe is down about 1% ahead of our open and our futures are down about 0.35% at 8:20. CPI comes out at 8:30 but nothing exciting expected there.
There's still a tremendous risk in the Chinese economy and, just this morning, Shaanxi Xinsheng defaulted on 4Bn Renminbi ($666M) and BAC analyst David Cui warns us, saying China must either A) Let the defaults take their course, risking a "chain reaction." or B) Continue printing money to bail out dysfunctional companies, putting downward pressure on the Renminbi. That will make China's foreign non-RMB debt more difficult to pay, creating "financial system risk."
"In a scenario in which investors are not bailed out and thus become more cautious, e.g, rolling over some of the debt instruments in the shadow banking sector, some borrowers may struggle to obtain