Morning Update: 6/15/2012

The stock market indices had a big session, but it was a wild volatile day especially in the last hour of trading. The day started out with a little bit of a move down on the Nasdaq 100, but the S&P 500 didn’t follow. They then rallied sharply, taking the NDX from 2515 to 2546. The S&P 500 jumped from 1312 to 1326, right at resistance. They backed off sharply so on the NDX, but non-confirming on the S&P 500. But when news out of Europe about a beckoning of the banks hit the market, they spiked higher. Literally, in 10 minutes, the NDX went from 2521 to 2547. The S&P 500 jumped from 1321 to 1334 nearly. They pulled back quite sharply and gave back three-quarters of the gains, but then rallied back into the close and took back quite a bit of the gains in a late pullback to close positive on the session.

Stepping back and reviewing the hourly chart patterns, the indices were down early, and then rallied nicely to late morning, before rolling over hard into late afternoon. They bounced, pulled back, and then bounced again. It was a volatile day, but they closed very positively on the day with good technicals.

We’ll have to see if there’s a follow-through tomorrow.

The neckline of the big head-and-shoulders pattern I referred to yesterday was nearly tested today. It was within a point of the neckline at 1335, but it back off and closed at 1338. Keep an eye on that level. A breakout above that could really trigger a strong short-covering rally. We’ll have to see what we get tomorrow.

 

Trades:

Instrument Strategy Market pos. Quantity Entry price Exit price Profit
YM 09-12 Responsive Long 1 12304 12600 1475.5
YM 09-12 Responsive Long 2 12304 12398 931

Friday, June 15

Economics
08:30 Empire Manufacturing – consensus 14, prior 17.09
09:00 Total Net TIC Flows
09:00 Net Long-Term TIC Flows
09:15 Industrial Production – consensus 0.1%, prior 1.1%
09:15 Capacity Utilization – consensus 79.2%, prior 79.2%
09:55 University of Michigan Confidence – consensus 77.5, prior 79.3
09:00 Fed to purchase $1b-$1.5b TIPS in 6 to 30-year range
JPY Bank of Japan Rate Decision
08:30 GBP Visible Trade Balance

Earnings
No major earnings

The CPI was down 0.3%, more than the expected down 0.2%. Jobless claims were 386,000, more than the expected 377,000. On Friday we will get the Empire State Index, quadruple expiration, industrial production and consumer sentiment.

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