Morning Update: 6/12/2012


The day started out with a bang to the upside as futures were strong due to strong news from Spain and financing for the Spanish banks. The market quickly faded and sold off steadily in the morning, down to mid-day. From there, they formed bear flags and indicated at that point, that we were going lower, which they certainly did in a sharp 5-wave decline, and the indices closed not far off the session lows.

Stepping back and reviewing the hourly chart patterns, the indices gapped up, came down hard, consolidating mid-day. From there, they rolled over in a sharp decline in the afternoon that closed the indices not far off the session lows and right near the moving averages in the hourly charts, which is a key area. As I indicated last week, there is a possibility that a head-and-shoulder bottom could be forming, but we need to move back into the 1300-05 zone to form the right shoulder.

We’ll see if that occurs, or that they break, and we’re headed lower in the throes of a declining major channel that could take us as low as the 1240-50 zone, if we do break support.


My Trades

Instrument Strategy Market pos. Quantity Entry price Exit price Profit
YM 09-12 Long 2 12438 12410 -289
6A 09-12 Initiative Trade Balance Extreme Long 2 0.9836 0.9817 -389
6C 09-12 Initiative Trade Balance Extreme Short 1 0.977 0.97 695.5
6C 09-12 Initiative Trade Balance Extreme Short 1 0.977 0.9699 705.5

Tuesday, June 12

07:30 NFIB Small Business Optimism – consensus 94.4, prior 94.5
08:30 Import Price Index – consensus -1.0%, prior -0.5%
10:00 IBD/TIPP Economic Optimism – consensus 47.0, prior 48.5
2:00 Monthly Budget Statement – consensus -$110.0B, prior -$57.6B
11:00 Fed purchasing $1.5b-2.25b in 25 to 30-year range
11:30 Treasury selling 4-week bills
1:00 Treasury selling $32b 3-yr notes
01:30 AUD NAB Business Confidence
08:30 GBP Manufacturing Production
14:00 GBP NIESR GDP Estimate
23:50 JPY Machine Orders
12:30 UK to sell GBP4.75b 5-year bonds

Factset (FDS) EPS $1.07, revs $203.04M
Michael Kors (KORS) EPS 16c, revs $360.93M
No major reports scheduled


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