Monday brought a gap and go trend day across the broader markets on lighter volume. Friday’s volume was high due to quadruple expiration, leaving today to come in lighter but overall not bad volume. The TRIN closed at 1.82 bearish and the VIX at 31.17, putting us well off the lowest of the year close we left on Friday (27.99). The A/D and U/D ugly selling on the day and left little room for any buyer to creep in this market. Gold closed down $14.70 at $921.50 and oil down $2.49 at $67.06, leaving that 70 behind.
Nas Composite, Nas 100 fell into May’s range and filled the gap that was open from the 29th. Nas Composite sits just 25 points over the 50dma and the Nas 100 is about 10 points off the 50dma for support. S&P 500 fell into May’s range, but is also back in the January range, we opened 2009 at 902.99and the low on that day was 899.35. Leaving us red on the year now with today’s lower close. Along the way the S&P also feel through the 200dma (900.76) and 50dma (898.62) by a few points. The Dow is also back in May’s range like everyone else and broke the 50dma (8377.89) in the wake of today’s selling. The Dow has not been green on the year and with this pullback put even more room between that January high and now. The selling was very broad based and didn’t spare any one sector on the drop.
Into Tuesday the market is short term oversold, but on the daily we have room still to fall before hitting supports on the 50dma on the Nasdaq and S&P 500 we would be looking down to 845.66 at this point. So intraday we look for a bounce, longer term we look for the drop to have a little more fuel in it. The correction is needed we’ve been climbing since March and this week marks a potential change in Fed policy. So the market is nervous and in need of a correction. We are seeing a lot of shaking after that 10 days in range to correct this move off the March lows. Earnings season is around the corner so this also lets the market start to look forward, AA kicks the season off on July 8th. The market is likely to hear about the Fed’s stance on rates, inflation and future plans for stimulating, leaving rates alone for now is expected but getting the market in the look forward mode to see WHEN change may take place. So the statement will be our focus on Wednesday.
Monday closed futures under S3 levels, VERY unusual to see that and we did not test the daily or weekly pivots. I was not expecting that kind of weakness today or a range expansion like this. So the market took the eraser out and made June a losing month and kicked the bulls to the curb on Monday. That let’s us look for the weekly pivot into Tuesday and Wednesday, if we haven’t seen it by then we aren’t likely to see it this week. The Daily’s shouldn’t be a problem to see since they are just over the close on any bounce look for them to be resistance. Retracing into 901.25 for the ES would be a nice bounce and the NQ 1442.50.
Economic data for the week (underlined means more likely to be a mkt mover): Tuesday 10:00 Existing Home Sales, 10:00 HPI m/m, 10:00 Richmond Manufacturing Index, Wednesday 8:30 Core Durable Goods Orders, 8:30 Durable Goods Orders, 10:00 New Home Sales, 10:30 Crude Oil Inventories, 2:15 FOMC Statement, Thursday 8:30 Unemployment Claims, 8:30 Final GDP, 8:30 Final GDP Price Index, 10:00 Fed Chairman Bernanke Testifies, 10:30 Natural Gas Storage, Friday 8:30 Core PCE Price index, 8:30 Personal Spending, 8:30 Personal Income, 9:55 Revised UoM Consumer Sentiment, 9:55 Revised UoM Inflation Expectations
Some earnings for the week (keep in mind companies can change last minute: Tuesday pre market KR, SCS and after the bell APOG, DRI, JBL, ORCL. Wednesday pre market MON, RAD and after the bell COMS, BBBY, NKE, RHT. Thursday pre market LEN, MKC and after the bell FINL, MU, PALM, SMSC. Friday pre market AZZ, KBH and nothing after the bell.
ES (S&P 500 e-mini) Tuesday’s pivot 894.75, weekly pivot 918, monthly pivot 904.50. Intraday support: 885.50, 881, 879.50, 876.25, 871.25, 869.50, 864.75, 859 (Mays low). Resistance: 892.25, 895.25, 900, 903.75, 907.50, 910.75 Friday’s low, 913, 919.75
