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BTIG analyst Jonathan Krinsky told investors in a note Monday that while the firm is watching SPX 4,177 (its June high), they have also noted that the 20 DMA is 4,166.
“There were some buyers around that level off the open, but an inability to hold above that would be another negative ‘tell’. Note the 20 DMA hasn’t been tested since mid-July, and typically the first test does get some traction,” wrote Krinsky, the Chief Market Technician at BTIG.
“IWM has also pulled back to its rising 20 DMA (192.04) and has also responded favorably thus far. Below the surface we are seeing some early outperformance from areas like China Tech (KWEB), Biotech (XBI), and Coal names, which we highlighted in our weekly note,” he added.
Krinsky said that overall, “it’s a pretty broad distribution day with NYSE A/D line -1548 and 84% of NYSE volume in declining stocks.”
“Utilities (XLU) still look timely to us on the downside as the 20 DMA is still ~2.80% lower, and ~7.5% downside to the 50 DMA,” Krinsky concluded.
