Bad News For The Narrative, Good News For Technicals

The way futures are trading on the latest PMI figures, I may need to change the stop I've been using.

Futures are trading below the equivalent spot on the cash S&P that is 2056.75. It appears now that 2040.49 is the better stop.

In other words, unless 2040.49 is broken, the S&P could still make an immediate new high in a wedge pattern.

Bloomberg had their hands full with the deluge of overnight data. Among the highlights that caught my eye:

China PMI slowed to near-contraction at 50.3, while Germany fell into outright contraction at 49.5.

"U.S. retail sales tumbled an estimated 11% over the weekend, according to the National Retail Federation."

"Moody’s cut Japan’s credit rating, a setback to Prime Minister Shinzo Abe a day before he begins campaigning for an election that he wants to focus on the economy."

Also, both crude oil and gold are higher on the day. The Swiss Gold Referendum was a resounding "NO" vote which caused gold initially to crater but not reach a new low.

Crude extended beyond a 161.8% Fibonacci extension but is now trading back inside it. Too many calls for $30 oil may send it back higher than most imagine.

Summing up the news, it appears, as usual, that the narrative is highly suspect (i.e., China will grow to the sky, Germany is the powerhouse of Europe, Black Friday was huge, etc.)

Technicals are never 100%, but they do screen out a lot of noise.

With the decline since Friday's stealth high -- the S&P opened at a new high and immediately sold off -- here is the speculative wave count I've been playing with. Thinking today and Friday's action could be wave 4 before another new high. If 2040.49 is broken, there could be another day or two of backing and filling before a possible rally.

However, 1991.40, the wave 1 high as labeled, should not be broken per this scenario or else something else is occurring.