The Pullback Was Due, but Can We Bounce?

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Our View

After trading up to its 39th new record high at 5721.25, the market finally reacted to a few negative headlines. I don't need anyone to tell me how far the ES and NQ have rallied; I've been observing it every day for 37 years. I mentioned that we might see 5750, but reaching ES 5800 wouldn't come as quickly as the last three 100-point rallies, given that the recent momentum felt like trapped buyers and the ongoing mammoth rotations without an apparent end.

I've commented several times on the 'weird' price action between the ES and NQ, and honestly, I think it's all part of a large-scale rotation. 

Money doesn't really sell; it just moves to whichever sector is in favor on any given day. I could present all the statistics of big down days, but I'll keep it simple: yesterday marked one of the worst July selloffs ever. Adding to this, there's the suspect July expiration — is the dip all just Opex driven? — and the seasonal weakness that typically follows after July 20th.