AheadoftheNews.com

The dollar is right at trendline support (72.10). Any further drop and the April lows get tested. If we hold here, there is a chance oil drops below 140.

June 30 (Bloomberg) -- The U.S. won't allow Iran to shut the Strait of Hormuz, through which the bulk of Middle East oil is shipped, a spokesman for the Fifth Fleet said.

``They will not close it,'' Lieutenant Nate Christensen said in a telephone interview today from Bahrain, where the fleet is based. ``The Strait of Hormuz is vital international waters.'' Vice Admiral Kevin Cosgriff, Fifth Fleet commander, made similar remarks to reporters in Bahrain today, Christensen said.

Things are getting heavy out there and traders need to stick to a day trading plan, no big bets yet, although I still think there is a big rally coming any day. You just won't be able to trust it as long as oil is above 140. We are very oversold and as mentioned earlier, 7% away from the 20 dma for NDX/QQQQ. That would make any drop from here risky if short as the snap back could be quick. It's a trade, but only for fast hands. NQ 1815/1819 is a magnet, as we have another gap for NDX at 1795/1818.

Close:

QQQQ ends the cash day below 45.27, not a very good development for bulls. It's still all about oil. Remember that this is the end of the quarter, lots of false signals.
NQ could be headed for 1815/1819, 61.8% and weekly S1 if we break Friday's lows.

PM Update:

End of quarter window undressing continues, but there is a sense that we are due for a real rally any day. The tape looks almost unwilling to move much lower, even though oil is at 141. If QQQQ closes above 45.27, it could be time for a swing long. After all, the 20 dma is almost 7% away, normally an extreme. It might also be time to start exiting all oil long positions.

Pre-open:

Dollar rises against major currencies
Associated Press 06.30.08, 7:36 AM ET
Berlin -

The dollar rose against major currencies Monday despite a new record for oil and a report showing yearly inflation in euro nations hit a record 4 percent in June.

Inflation may put pressure on the European Central Bank to hold off on expected rate hikes later this week.

Oil is up, however, on some Iran news. Let's see how gold does under these conditions.

Overnight session:

Equity bid with a bond bid, always suspicious. NQ current resistance is 1871, monthly S2.

DOW monthly chart: is 50% of 2002/2007 the ultimate target (10698)? If so, resistance should be at 11524, 38.2%. Resistance above that would be 11750, 2000 high, prior support.
A dive down to 10700 would most likely put SPX right around 1200...

QQQQ closed with a relatively bullish candle. The first April gap was closed (chart) and we ended the day above the gap close (45.27). However, bulls would have preferred a close above 45.83, 50% 2008. That is going to be the key number you will want to see on an hourly basis before placing any big upside bets. If bulls fail and lose 45.27 again on Monday, we have a very strong pull to 44.70, 61.8% of 2008 and the second April gap open. That gap gets closed at 44.14, but losing 44.70 better only be a quick snap, since it is of course the most important fib number out there. A close below 44.70 almost guarantees a retest of the bull market trendline, now at 43.50/43.70. A rally from that level could be potentially very bullish.


On the subject of the bull market trendline, a look at the monthly chart with fibs clearly reminds us where bulls held the line in March, and that is at 41.58, 31.8% retrace of the entire bull market for this ETF. I will confess that even though everything is pointing to a complete collapse of the markets, there is something very compelling about the action in the tech sector. Frankly, that is where I would start placing some longer term upside bets as long as we stay above 43.50. For the next bear market rally, you need to be be long the Q's. Period.
I closed my short positions pretty much all around and am now day trading and waiting for a better signal. The general media has become extremely bearish and the one article that really got me worried as a short was the one CNBC put out, recommending that the general public start shorting stocks. That is a very, very scary development for anyone in bearish positions. Shorting is already a tough game, but when you tell the average Joe to got out there and engage in that game, you know his head is about to be handed to him on a platter. In other words, don't get stuck in a bias. That does not mean go long, it just means be ready to go long if we get the signal. And we could be there any day, if not already.
The other possibility, is that we hold the line with sideways trading throughout the summer. That would favor pros and we will take advantage of this, by day trading and not placing big bets either way. That is frankly my preferred approach at this stage. Day by day, short or long, I'll take either one. Just know the overall parameters.

PM update (2):

There was some great trading in the past hour. Now we settle into end of day and end of week. I suspect not too many heroes out there. But we are right above very strong support, namely COMP April gap (2287), SPX January lows and of course QQQQ, now back up above its already closed April gap. At this stage, the dangerous and low-odds play is being short, not long. We could get one more drive down on Monday, but there is a 4th of July rally in the wings.

PM update:

The tape got uglier as oil moved back up above 141. Glad we booked our profits. NQ could drive down to 1839.50/1841.50. We are at that stage when you don't really feel like shorting but don't really feel like going long. That is usually the best time to sit it out and wait for something to come your way. XLF getting heavily oversold, I would love to see the October 2002 lows at 18.50 or a little higher and just load up. Bear market rallies are always great fun, just try not too be the early sucker.

SPX dropped 1277 and the January low of 1270 is in sight. And of course, it's Friday...

Here comes SHM 29.40, 61.8% retrace, below that it's the gap close at 28.86.

Update (5):

AD lines are not improving much and the trade is close for +9, add +4 earlier and the day ends at +13 (NQ, $20 per point per contract). I will update after the close. We might rally hard, but I always recommend taking the money if breadth does not correlate enough. I will keep trading in and around this, but for the readers, play it safe.
Longer term traders can pick up some INTC October 20 calls right here, not a bad bet if 21 holds.
We are in the last two trading days of the quarter, funds are dumping the stocks they are embarrassed to own.
If you found this useful, let me know.

Update (4):

Raising stop to 1848.25. NQ is back above 1853.25 on volume. Conservative traders can book another +6 here. If oil gets back up to 141, hard selling will resume. But keep in mind that at some point, equities will lead and hedge funds will rotate out of oil, even if only for a two day trade. So you can't always follow oil, it's not that easy. NDX is also more than 5% away from its 20 dma, usually a buy trigger.

Update (3):

The trade is re-entered at 1851.25 on the lower low with divergence. Stop at 1847.25, trade is now free with +4 in the bank. Oil loses 141. QQQQ went down to 45.26, still acceptable, but NQ can't get sold hard on the next move up to 1853.25.
If we do lose 1849 again, there is a flip to short down to 1842, with a possible drop to 1839, close to QQQQ 45 and another buy. SMH has support at 29.41 if we lose the curent lows at 29.51, but my bet is we are done on the downside. But price is price and be disciplined with stops.

Update (2):

Trade is exited at 1858, Oil is pushing back up, taking a profit and awaiting a re-entry. If 1853.25 holds, getting back in.Otherwise waiting for a slight lower low with divergence.

Update (2):

Overnight highs were sold, raise stops to lock in profits. You can always re-enter. Remember, NQ 1853.25 and 1858.25 are both levels that need to hold now. Oil is back above 140.
Note that the opening lows corresponded to TNX 4% (3.99). Bonds are still bidding, though, so be careful. Shorting here is an otion, but scalps only. SPX hit 1279, two points higher than the 1277 I was waiting for, but we are close to an important level, at least short term.

Morning update:

Looks like a winner so far. I got in at 1850 and moving stop up to even. If we underthrow, I'll hit it at 1841/1843, but that would be it as losing the April gap would be bad news for bulls. Overnight lows at 1853.25 is what bulls need to defend, if they lose 1858.25 again. Right now struggling at 1865. Conservative traders can book +15 now, or raise stop to just under 1858 and guarantee 6 or 7 points. You should be in this trade, I have harped long enough about that April gap for QQQQ.
(this is a preview of an upcoming paying service I will be providing).

Open:

QQQQ tags 45.28, with NQ at 1948.75. The April gap is closed, let's see how bulls do here. Maybe one little underthrow is allowed, but not much more. My bet is we hold, but keep stops tight. Watch 1858.25 on any bounce.

Overnight session:

Oil keeps climbing and gold breaks out above 920, never losing 910 support. This time however, bonds are selling and the dollar is up against the euro. Oil has resistance at the following projections: 141.75 and 145.65. Currently, 141.75 is holding it back, 23.6% off May.
We should get more downside at the open if NQ can't hold 1865. The QQQQ/NDX April gap close would correspond to daily S1 on NQ at 1842. I expect a snap back when that is hit.

The VIX is not making new highs on the new SPX lows. Are we starting to see some bullish divergences? OEX closed right at the March lows, not a good sign, we could still see an underthrow.

But SMH (semi-conductor ETF)held the trendline off March lows so bulls are still alive.

Again, watch that NQ 1865 level. QQQQ April gap close is a little further down at 45.27, so we could get some more selling tomorrow.
Overall, the tone is getting very bearish, with articles in the general media suggesting investors go short. This is normally a good contrarian indicator, but picking bottoms is still very dangerous. Just understand that we could see a bear market rally any day, so pay attention to the tape. I'll confess, I'm starting to nibble, but mostly some overnight trades. End of quarter still favors the bears overall.

For SPX, watch the January lows, in particular 1277, with a must hold at 1270. I would not be surprised to see bulls hold this given the extreme pessimism out there.

Gold continues to be an outstanding trading vehicle. Resistance is weekly R1 at 920, support is at 909/910, followed by 907.50 and 903.50. I was lucky to be long before the breakout, but I cashed in this morning. I'll go back in, remember that gold is a trade and treat it as such. Everyone is now on the 150 oil bandwagon, that trade is getting too easy and too crowded. Blow-off top coming?

Closing hour:

NQ closes its April gap 1865/1866. So far, bulls are holding it.

PM update:

The COMP April gap has been closed (2341). My target is still NQ 1870 (maybe 1865, 50%), but we will see if bulls can hold the line at these levels.
SPX is at the March 20 low (1295).

Excellent article by National Geographic on nuclear waste: link.

Morning update (2):

For NQ traders, strong support would appear between 1865 and 1870.
RIMM does not have meaningful support until 120/122. Watch GOOG and the 535 level. If that fails, we should see 485.

YG (August gold) found resistance at 917, trendline off April high. Support is 910/913.

Morning update:

It's getting ugly. Watch SPX 1300.23, 76.4% projection of the head and shoulder.

Open:

Gold did indeed breakout. Unfortunately, that also means higher oil and NQ tumbles further to 1901. It now looks like the April gap for NDX is targeted (1841).

June 26 (Bloomberg) -- Crude oil rose more than $3 a barrel as a lower U.S. dollar spurred investors to purchase commodities as a hedge and Libya said it may cut production.

We saw the chart yesterday before the breakout and that big volume bar off the 20 dma for crude. Obviously, someone knew that news was coming but we spotted the clues.

Overnight session:

The action in gold is intriguing. We have had so many false breakouts, but this one looks like it could stick. The dollar is about to lose its 50 dma at 72.91 just as gold moves above its 50 dma at 894. All the ingredients are in place: the Fed warning about inflation with no rate hikes, dollar fall and crude bid. The coast should be clear as long as gold holds 888/890 on any pullback. As I type, we just printed 896.20, a higher high from Monday. Weekly pivot is 894.20. Lots of confluence in this area. This could be the last chance for gold bulls to push through.

Nice bounce on volume for crude at the 20 day moving average. I would not be short quite yet, unless scalping. I still expect a breakout to 145/150 in the coming days/weeks if oil bulls get back above 135.35. They lose below today's lows.

Responding to some e-mails, I am trading crude using gold. The math is simple:

QM (nymex crude e-mini), $5250 margin per contract, $500 a point. Today's move off lows 2.5 points or $1250 on one contract. YG (ecbot gold e-min), margin per contract $900, $33.20 per point per contract. Using 5 YG contract, same dollar margin as one QM, move off lows for gold 15 points or $2500 (overnight margin initial is $1250 for YG but day is $900).
Please don't tell Lieberman.

Close:

RIMM doesn't cut it and NQ closes at 1931.50, after hitting an intraday high of 1960.75, under the 50% mark for the day. Pretty bearish action, especially since the 5 dma was lost again. RIMM has resistance at 133/134 now. One wonders if someone got a hold of those numbers early because the selling started 30 mns before the news hit. It has sadly become commonplace to witness this type of action in the futures market. Why get caught using options, whack the futures. It's a joke.
ISE was a tip off earlier as to excess retail trader optimism.

Closing hour:

Even though indices are in the green, the action is becoming increasingly bearish as the dollar loses ground and oil is back at 134.50. NQ sold off at weekly pivot (1958.50). If bulls can't close NQ above 1941, this little rally is over for the week. Resistance is back at 1952.
Big comeback for gold after hitting a low of 873, back at 888. Obviously, traders felt that the Feds were not tough enough on inflation in their wording.
RIMM and ORCL after hours will provide some excitement.

Equity ISE hit 200 this morning, all that optimism should get crushed soon.

PM update:

NDX is finding resistance at 38.2% 2006/2007, 1936.51. Oil did find some support at its 20 dma. We await the Feds.

SAN FRANCISCO (MarketWatch) -- Inflation is "exploding" and the Federal Reserve should stress that fighting rising prices is a primary goal, Berkshire Hathaway Chairman Warren Buffett told CNBC on Wednesday. The Fed should be concerned about both inflation and economic growth, a tough thing to do, he explained. But inflation should be the Fed's main concern right now, Buffett added. "Inflation is really picking up," he said. "Whether it's steel or oil... we see it every place. It's exploding." The Fed has to be very careful not to signal that inflation is a secondary concern and something that can be dealt with later, Buffett explained.

Morning update:

Big drop in crude on the inventory numbers. That is pushing techs higher, with NQ now trading above its 5 dma. Internals are bullish. NQ support is now 1932/1934.
Watch crude oil support at 132.50, 20 dma.

Pre-open:

June 25 (Bloomberg) -- Orders for U.S. durable goods remained unchanged in May as companies trimmed investment plans, signaling the economy may keep slowing.

Bookings for goods meant to last several years totaled $213.6 billion, the Commerce Department said today in Washington. April orders were revised to show a 1 percent drop that was larger than previously estimated. Excluding demand for transportation equipment, which tends to be volatile, orders declined 0.9 percent, the first drop in three months.

This is treated as a non-event. New home sales and oil inventories later this morning will set the course before the Feds. Watch bonds, they are giving you clues as to equity direction. Initial yield resistance on the ten year (TNX) is at 4.15%.

Cynic's corner: those of us watching the bear market rally unfold remember being suspicious at the durable goods number early last month. Of course, it's now revised down. But that's too late for those who believed in the "mild recession" theory.

June 25 (Bloomberg) -- Governments would be ``foolish'' to limit participation in commodity markets and curb speculation because prices are based on supply and demand, London Metal Exchange Chief Executive Officer Martin Abbott said.

Surging prices for commodities such as crude oil, corn and copper have prompted lawmakers including U.S. Senator Joseph Lieberman to suggest more regulation is needed to limit the role of speculators in the markets.

``There is no way that any speculator wants to be the person driving the market,'' said Abbott, who heads the 130- year-old LME. ``Anyone can think of a strategy that would drive a market, but not many people have managed to think of a strategy that would get them out of that strategy with a profit. That's one of the things that keeps markets safe.''

Blaming price swings on traders could lead them to abandon regulated exchanges ``and use their investment dollars elsewhere,'' the International Swaps and Derivatives Association, the Futures Industry Association and the Securities Industry and Financial Markets Association said in a letter to Congress on June 18. ``Such an exodus threatens the healthy functioning of the markets and the economy.''

Excellent points by Abbot. Lieberman, of all people, has now decided he is smarter at "fixing prices" than the market. Let's hope that this despicable politician, who is always trying to ride some kind of populist wave, stays away from the commodities market. All he is doing is adding short fuel for the next leg up.

Noon update:

One little pop higher to NQ's 200 ema at 1931, which got sold. We could be in a range between 1919 and 1929. Key support for NQ is narrowed down to 1916.
Oil is still around 137 and the weaker dollar is not helping matters.
On a bullish note, the slight underthrow for OEX to 592 was quickly bought, pulling the index back above the January lows. We now have a definite marker of vital support for the markets between 592 and 594.
Overall, I would not trust a bounce as long as NYSE stays below 8856/8858. I still think there is a lot of unfinished business below, namely gaps. End of quarter window dressing could be of the undressing type.

Morning update (2):

NDX dropped into the gap down to 1888, but has since recovered moving up to 1902. The fact that TNX held 4.1% could be an indication we have put in a low for now. Equity ISE has jumped to to 169, that might be optimistic ahead of major data tomorrow. Watch NQ 1919.25 on any bounce. We are very oversold and due for a squeeze.

Morning update:

As expected, consumer confidence is in the tank. OEX drops 594. Pay attention to the yield on the ten year at 4.10%, an area of strong support (if you are trading bonds). That could be the low on TNX ahead of the Fed tomorrow.
The DOW is right at 11750, the old 2000 high. SPX lost 1310, an important level.
If NDX breaks to new lows, the April gap below is 1841/1892. NQ resistance is 1910. Bulls get it back above 1919.25.

Pre-open:

WASHINGTON (MarketWatch) -- Home prices in 20 major U.S. cities have dropped 15.3% in the past year, according to the Case-Shiller home price index released Tuesday by Standard & Poor's. Prices were down 16.3% in a smaller subset of 10 homes that have been tracked over a longer period. Home prices fell in 12 of 20 cities in April compared with March, but are down in all 20 cities compared with a year earlier. Prices are now down 17.8% from the peak two years ago. The Case-Shiller index tracks sales of the same homes over time, so it's not influenced by the mix of homes sold in a period.

NQ loses 1910, weekly S1. NDX has a multitude of gaps below, be careful. Consumer confidence at 10. Watch OEX 594/595.

June 23 (Bloomberg) -- United Parcel Service Inc., the world's largest package-delivery company, lowered its second- quarter profit forecast because of rising fuel costs and a slowing U.S. economy.

UPS said the ``anemic'' U.S. economy was causing customers to cut back on air shipments, its most profitable offering, and that international packages coming into the U.S. were also declining.

Transports look vulnerable to a retest of 5000.

NQ lost 1919 and hit weekly S1 at 1910 within half a second of the overnight session open. It better hold or those April gaps loom below (NDX 1841, QQQQ 45.27).

Closing hour:

Everyone is trying to pick a top in crude, you can see it in the action with NQ (NDX futures) every time oil drops 50 cents. The hopeful start buying techs, only to get burned pretty quickly. Obviously, these rallies are still being sold into.
I think some investors need to be reminded that there is no difference between 135 oil and 137 oil. It is still high.
NQ did indeed find suppport at 1919.25, June 12 low. That along with OEX 695 will need to hold, or we will see a test of 1900 for NQ.
Gold is being hurt by the bond action which is holding up the dollar, but found support at weekly S1 (877). I hate to think what will happen to equities when bonds bid again.

Morning update:

Oil is back above 136 and techs sell-off. We might see weekly S1 (1910/1911) before we see weekly R1, although we have some support at 1919.25. Watch Friday's low at 1927.50.

Pre-open:

June 23 (Bloomberg) -- The euro dropped the most versus the dollar in more than a week as German business confidence fell in June to the lowest level since 2005, reducing speculation the European Central Bank will increase interest rates this year.

Big drop in gold as oil falls from 137 and the dollar rallies. Last week's breakout for YG looks dead if it can't get back above 898 soon.
Bonds are selling but NQ found overnight resistance at 1952.50, last Wednesday's low. YM is back above 11900.
Weekly pivot for NQ is at 1958.25 and weekly R1 is at 1989 if bulls do a major rally ahead of the Feds. Friday's gap closes are 1990.75 for NQ and 1341.50 for ES. We might not get that far, but since it corresponds to weekly R1 for NQ, it could be a magnet this week. Remember yesterday's OEX analysis, watch 594. support.

Overnight session:

So far, not much reaction in crude oil, only down 49 cents at 134.87. It looks like all this talk was a non-event, although this could change once Europe opens. Watch that 135.09 level to see if it acts as resistance.
Gold 906.20 is an important number as well.

For the record, I am not interested in picking a top in oil, unless we hit the 145/150 area, 50 to 61.8% projection off May. That would put USO between 115 and 120. I might grab a short on breakdown if it looks impulsive. Right now, forget it. No trade.


Some heavy duty electric bills coming in next month. Not your usual month of June in So.Cal. Add gas above $4 and many are hurting over here.

OEX (S&P 100) is probably the most important chart out there at this point. Like NDX, it is loaded with the biggest cap stocks, but unlike NDX, it includes financials and thus gives us a better idea as to where we stand.
After losing 50% 2000/2002 (615.68) last week, it headed straight down to test the January lows (594). If that holds, there is a possibility that we could be forming an inverted head and shoulder on the monthly chart, which would be very bullish medium term. Of course, 595 needs to hold on a monthly closing basis. If bulls can't defend that level, we will most likely test and lose the March lows (583.64) and head straight down to 561.23, 38.2% 2000/2002. Resistance above 600 is 615 and 621. Bulls take over above 639.
Set your alarms accordingly and once the trend is set, don't fight it.

June 22 (Bloomberg) -- Saudi Arabia may raise its oil production beyond a planned 200,000 barrel-a-day increase in July if the oil market requires extra supply, Saudi Oil Minister Ali al-Naimi told consumers at a summit in Jeddah.

The plot thickens.

June 21 (Bloomberg) -- Chevron Corp.'s Nigerian unit halted onshore oil production after one of its pipelines in Delta state was ``breached'' by a suspected act of sabotage.
About 120,000 barrels a day of crude have been halted by the blowing up of the pipeline, Agence France-Presse reported today.

June 21 (Bloomberg) -- Saudi Arabia, which convenes a meeting of government and business leaders tomorrow to discuss world energy markets, will raise its oil output by 2 percent in July, the country's oil minister said.
The kingdom will add 200,000 barrels of oil to its daily production next month, taking its total to 9.7 million barrels a day, Ali al-Naimi told reporters in Jeddah, Saudi Arabia today. State-owned Saudi Aramco will soon add 500,000 barrels, or 4.6 percent, to the kingdom's total production capacity with its Khursaniyah field.

Two competing stories, you do the math. The Saudis move is expected, is it priced in?


The trading range is broad, between 130.80 and 139.12, with a fulcrum at 135.09. Moving average support is the 20 dma at 131.65. Battle lines are drawn.


Those of us who actually do research wonder why oil companies are not drilling right now in the millions of acres they already lease:

(Bloomberg): Bush and his fellow Republicans are seeking to portray Democrats as standing in the way of measures to help lower gasoline prices. Bush's move carries some risk as well, because offshore exploration has faced opposition in Florida, which will be a battleground in the presidential campaign.

Use It or Lose It

Rahall and other Democrats are sponsoring legislation that would force the oil companies to drill on lands already leased.

``Simply put, we are telling Big Oil to use it, or lose it,'' Rahall said in the Democratic Party's weekly radio address. ``They would either have to produce from these lands, show they are being diligent in their development, or give up the right to control even more federal energy resources.''

Rahall said Democrats are planning to introduce legislation that would ``shine the light on speculators that have driven up the price of oil'' and reduce fares for mass transit.

The oil companies are able to drill in areas of the Gulf of Mexico and around Alaska. The Republican proposal would allow drilling along the entire Outer Continental Shelf, including along both the East and West coasts.

Rahall said an investigation by his committee showed that more than 80 percent of the estimated oil and gas on federal land is already available for drilling or will be in the near future, all without challenge from environmentalists.

Close:

Ugly. SPX loses the April 15th low of 1324.35 and settled just above the March 31st opening price. The head and shoulder has now seen a 76.4% projection, 100% would be at 1300 if we lose 1316 on Monday. The COMP fared better, holding on to the June lows, in fact closing 18 points above. Higher oil was blamed, but I suspect all those puts suddenly became alive and we saw a tremendous amount of delta hedging. We were due for a down op-ex, we got it.

Open:

Some talk of war, and crude oil jumps back up to 136. SPX must hold 1324.35. Be careful, this is going to be a volatile day.
If you bought gold the past few days on the technical patterns I laid out, you should raise your stops to 898 and just let it ride. A break above 912/913 would set up 920. 903/904 is immediate support. I will update later.

Close:

Even though internals were weak, bulls took over pushing techs back above the last three days of losses. The close was shy of the 20 dma for NDX, so a question mark remains. It looked like short covering for the most part, but there was some rotation out of oil into techs. This is still op-ex, so don't trust the direction, especially tomorrow.
Gold pulled back on the dollar rise and oil drop, but support is holding at 898. The downtrend line from the March high is broken to the upside as long as 895 holds if 898 breaks.
No economic news tomorrow so we will be at the mercy of quad witching settlements.

PM update:

I had a feeling last night that the short side was too crowded. Nice rally for QQQQ as it heads its way back to to 49. NQ closed the gap at 1986 and that is support going forward. Financials are still weak, so this rally could quiet down, but bears definitely got whacked.

Morning update (2):

That negative bonds did lend support for equities and we are now green as NQ closes an hourly candle above yesterday's lows. Bulls are not out of the woods, but it looks like we put in a low for now this morning. AD lines are improving as well.
NQ still has a struggle at 1962.50, so we could be in for some chop.

Morning update:

Leading indicators rise, Philly Fed drops, we make a lower low. Gold did break out above 900 (see last night's post). Bonds are still negative but the mood is still very bearish for equities. Watch yesterday's lows.

Pre-open:

June 19 (Bloomberg) -- Initial jobless claims fell 5,000 to 381,000 in the week ended June 14, more than forecast, from a revised 386,000 the prior week, the Labor Department said today in Washington. The total number of people collecting benefits dropped 76,000 to 3.06 million for the week ended June 7.

Bonds are negative and have been most of the overnight session, giving support to equities. NQ is hovering around the key 1962.50 level. However, the market is more interested in the leading indicators number at 10.

Bullish diamond pattern on gold? Watch that 900 level for signs of a breakout.

Close:

Investor intelligence shows a big drop in bullish sentiment to a level not seen since early April. I am waving a caution flag for shorts. We made a nice trade from QQQQ 49, I hope you took some profits and brought your stops down on the remaining, right above the 5 dma. We can go lower, and probably will, but no one ever got hurt booking a profit. That's why you let some ride and cash in the rest. This market is very hard to trade.
On a price basis, NQ will need to hold the 1955 area in the overnight session. Resistance is that 1962.50 level which will probably get sold overnight.
RIMM looks very extended. I am starting to look at that one as a short should it move even higher prior to next week's earnings.

Closing hour:

The short side is getting too crowded. If NQ closes above 1962.50, 50% Oct/Mar, bulls could swing this around for now. Numerous attempts to break the 50 dma to the downside failed, mostly because of the op-ex 48 pin. Respect the tape and take your money when it comes. Another break below YM 12K and NQ 1955 would put the bears back in charge. NQ has 5 dma resistance at 1971.50.

Morning update (2):

Oil still holds 131, but lost 134. NQ dropped to its 50 dma, but the COMP has important support at 2425, which it held for now. As mentioned earlier, ISE equity is very low, slipping below 1 all morning. This usually sets up short squeezes. For now, AD lines are very negative and bears are in charge, especially below NQ 1964.75 and 1962.50. Book some profits if short, remember, this is op-ex.

Morning update:

NQ weekly pivot is at 1964.75.

As we await the oil inventory data, one word of caution for bears is that equity ISE has dropped to very low levels, meaning everyone when short all of a sudden. Just a heads up for tomorrow.

Open:

XLF (financials) is testing the March lows (22.29). This would be a third hit of the area. If they lose that, we should see the 2002 lows in the coming months. It's not looking very good for bulls.
QQQQ hit 48, its 50 dma. There should be some buyers there, but note the 5 to 1 down volume on the NYSE.
Oil inventories at 10:35. Watch CL 5 dma resistance at 135.05 and 20 dma support at 131.40. Tech bulls want to see a big drop in oil today. Keep in mind that we are also rotating out of the July contract into the August contract.

Pre-open:

June 18 (Bloomberg) -- FedEx Corp., the second-largest U.S. package-shipping company, reported a fourth-quarter loss of $241 million, reflecting rising fuel costs and a writedown on the FedEx Kinko's unit.

Transports are going to take a hit. What is happening to FedEx is going to happen to everyone that relies on moving goods this earnings season.
Bonds have a bid, yields are down to 4.188%. QQQQ has lost 5 dma support at 48.33. ES has fib support at 1340/1340.75. ER has support at 731/732.

Expiration week has been positive for four months in a row. Historically, it would indicate a strong probability of a down week this month as we have not seen four up months in 18 months (chart courtesy Schaeffers). There are also a significant amount of puts below us, normally support, but as discussed over the weekend, should these lower levels get penetrated we could see a selling stampede as put sellers hedge. Bulls cannot let support drop this week.

Everyone needs a head and shoulder these days and ER (small cap futures) might have decided today was its turn. As you can see on the chart (and my earlier comments today), 745 turned out to be too much of a challenge for bulls. It was the 200 dma and the old March trendline support by extension. If the head and should gets confirmed by a break below 718, we have a very nice downside projection to a minmum of 691 (50%), which also happens to be the April gap. But first things first, bears will need to see a break below 731/732 before counting their chips. Resistance is at 740/742 and of course 745. Forget the game plan above that.

Closing hour:

This is not a good tape for bulls. Internals are weak, you can just feel that the whole thing is being held up by quad witching. One little banana peel on the road will start a large slide.
I still have my eye on NQ 1995.50 and ER 741.70, both gone for now. Semis are down, banks are down and retailers can't even get above the 50 dma (RLX).
We could see one more short squeeze in the last hour, that would be on par for