Morning Update: 6/22/2012

The stock market indices did not fare well today. It was a very bad day on Wall Street as the markets were pounded with economic news, both domestic and abroad, as well as bank downgrades. The day started out poorly. The indices opened lower, and then moved down to support a bounce from bear flags.  We came down and broke three layers of support, and closed at the lows for the day going away.

Net of the day, the Dow was down 250.82 at 12,573.57, about 8 points off its low, the S&P 500 was down 30.18 at 1325.51, and the Nasdaq 100 down 66.37 at 2556.96.

It was a very, very negative day on Wall Street.

Advance-declines were nearly 5 to 1 negative on New York, and 4 to 1 negative on Nasdaq. Up/down volume was about 7 to 1 negative on New York, total volume about 860 million shares. Nasdaq traded 1.75 billion, and had a 7 to 1 negative volume ratio.

Stepping back and reviewing the hourly chart patterns, the indices came down in the morning, then basically stair-stepped their way lower in distinct falling channels and wedges all day, each rally failing at resistance. Not one time did we get 15 minutes of rallying during the session, other than the quick one in the morning. It was a very bad day, but what is distressing about today is that the necklines on the recent head-and-shoulder patterns that were broken to the upside, rolled over hard through those necklines, and closed right near key secondary support. So the bulls better step in tomorrow, or this market will get hammered lower.

We’ll see what happens tomorrow.

Instrument Strategy Market pos. Quantity Entry price Exit price Profit
6E 09-12 Long 2 1.2577 1.256 -434
NG 07-12 Short 1 2.609 2.623 -144.5
FDAX 09-12 Initiative Trade Balance Extreme Short 2 6406 6411 -259
TF 09-12 Initiative Trade Balance Extreme Short 1 775.9 776.7 -84.5
TF 09-12 Initiative Trade Balance Extreme Short 1 775.9 776.7 -84.5
FDAX 09-12 Initiative Trade Balance Extreme Short 1 6403 6407.5 -117
FDAX 09-12 Initiative Trade Balance Extreme Short 1 6403 6407.5 -117

Friday, June 22

Economics
No major U.S. economic reports
11:00 Fed to purchase $1.5b-$2.25b notes in 25 to 30-year range
01:00 NZD NBNZ Business Confidence
08:00 EUR German IFO Business Climate
12:30 CAD CPI
11:10 UK to sell bills

Earnings
Before:
Darden Restaurants (DRI) EPS $1.16, revs $2.11B

Initial claims were 387,000, more than the consensus 383,000. Existing home sales were 455,000, less than the expected 457,000. The Philly Fed Index was – 11.6, much less than the anticipated 0.5. There is nothing of significance scheduled for Friday.

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