We woke up this morning to see the futures hit very hard once again, which is becoming a habit these days. Bad news from Spain and Italy knocked those two countries down. Their stock markets were hit between 2-3%. Ugly, for sure, and as is the norm for such events, and our futures followed down as well. They were flat heading into the evening time last night, but fell overnight as those two markets got crushed. The gap down today, at least, was filled on the Nasdaq 100, and close to filled on the other index charts. No real technical damage done in the end, but things got oversold pretty intensely, thus, the bounce had to be expected. Spain and Italy are fighting financial melt downs now, which shouldn’t be taken lightly. Some real carnage going on there, as their Governments are fighting to keep things afloat. You can’t be sure that every bailout will work, but they are trying to bail out as many distressed banks as possible, and there are many, to be sure.

Creating more debt is never a good answer, but they are in desperation mode now, and are responding by printing again. Their markets did stabilize, but still had some huge losses. Without intervention, the losses would have been much greater. We have to worry about Europe every day, sadly, which is not an easy way to play this game. When the day was over, the losses were cut down quite a bit in our markets, but there were losses, nonetheless. Another day as things try to unwind themselves down on the daily charts. We’re down roughly 4-5% off the highs, and this is not bad considering how much the daily charts have unwound, but our markets are still vulnerable as we saw today. Today wasn’t as bad as I said, but there’s no reason to be jumping in on new plays right now. Another decent day for the bears, but nothing to truly celebrate either, especially when you consider the news that has been hitting from overseas.

The earnings season has been an interesting one. Most companies aren’t saying anything all that bad, but most stocks, especially those with high beta and a pretty good P/E are getting smoked. Even ones who guide higher at times are getting smoked. Their trades are full. The prior moves had these good numbers built in, and now they’re selling things off pretty hard, sometimes pretty mercilessly. Tremendous drops lower, especially if you, unfortunately, miss by even a penny. There’s just no mercy whatsoever. This is not the time to even think about holding onto a company’s earnings report. The risk reward is just not there at this point in time.

Cisco Systems, Inc. (CSCO) slaughtered after hours tonight, and to a lesser degree, Priceline.com (PCLN) as well. There are some great numbers at Priceline, but they’re selling it some anyway. That, again, has been the way things have gone this earnings season. It all depends on when they report. With the market still in the agnostic phase of things, the market is selling off the stocks that had good run ups. It doesn’t seem to matter how their guidance is, they’re simply being sold off. If the market was in the strong, bull phase, as it was many months back, these stocks, at least most of them, would be rising. For now, just stay away from an earnings stock. Know those dates.

The futures are down big this evening, thanks mostly to Cisco. Priceline is not helping. Europe is a mystery every night we go to sleep. Even though we hit first support at 1340 (1343 today), there is still a strong chance we’ll get down to that 1325 level, or even as low as the 200-day exponential moving average at 1313. We have to watch things as they unfold both on price, and on those daily oscillators. The unwinding is occurring, but there’s still room for down-side action. RSI’s are down to the upper 30’s on the daily charts, but we can still drop further, of course. Let’s see just how nasty things get tomorrow, or if somehow we can get some recovery overnight. Don’t count on it though.

Tomorrow will be very interesting for sure.

Peace,

Jack

(Due to some technical difficulty, there will be no charts this evening, however, they will resume on Friday.)