Big Bank Tax May Not Be 3%

SUMMARY:

- Thursday just a blip as market suffers more relative carnage.
- VIX trying to break its range.
- Big Bank Tax may not be 3%. Time to celebrate?
- Exxon discovery should help our leaders discover we can wrest energy independence from our enemies versus taxing gas an extra dollar to make us buy cars we don't want.
- Market again oversold, approaching next resistance. Another downside move to start the week sets the stage for a better relief bounce.


MARKET SUMMARY

If only Thursday had sold some more . . .

It appears that Thursday was just a blip on the screen or a relief valve. It released some of the downside pressure after it tapped the bottom of the SP500 trading range and faded. Friday there was simply more carnage to the downside. Stocks opened lower as the premarket indicators were all down. It sold off hard and tried to rebound. They did cut their losses to less than 1% in the afternoon. Then, as quickly as they rebounded, they turned parabolic and sold off close to session lows. NASDAQ, -1.5%; SP500, -1.4%; Dow, -1.4%; SP600, -1.6%; SOX, -1.7%.

There were even butt-kickings across the board. Looking at the indices, there was a complete reversal of that blip to the upside. The market made it seven out of eight sessions to the downside and sharply sold. If Thursday had opened similarly to how Friday opened, we would likely have a rally ongoing as of Friday. The problem is that Thursday started higher and it did not finish the job. It was kind of like Desert Storm. We kicked the Iraqis back to Iraq and had them on the run. We could have destroyed the entire army, but we decided not to. Then we had to come back later to finish the job -- although that is debatable. It did not finish the job with the selling on Thursday. Instead it started to the upside which let all of the pressure off. When no good news came, the market sold one more time.

Just like that, the market is once again as oversold as it was on Wednesday -- indeed, even more so. The SP500 is down 7.3% in a six-week period since it peaked in late April. The selling has been back-end loaded with the past two weeks delivering most of the carnage with a 5.5% loss to start June. In the bigger picture, this is not major. It is not even a 10% correction level. Consider the impressive run out of August 2010 that no doubt started with the Fed coming in with its QE II. This selling is not even taking the market back to the March reaction low after the Japan earthquake and tsunami. Even though you can say this is nothing in the longer run, this is a significant selloff in the short term. It does not mean the market is not down hard and oversold based upon these past two weeks.

The pattern does not look that promising overall. There is a potential head and shoulders here, but I have a big caveat with that. Head and shoulders in the indices are not reliable patterns. Everyone likes to cite them and everyone can see them forming a long way off, but they typically are not reliable. You have to look over years for the indices to really see major tops called by head and shoulders. Looking at a weekly chart, there is this topping point. This is significant. There is a potential left shoulder and potential head -- they are only potential at this point. They are forming at other past support and resistance levels. That is always something to watch bigger picture.

I will get back to near term. The news on Friday was that the big bank tax may only be 2.2-2.5% versus the 3% originally discussed and endorsed (unfortunately) by Ben Bernanke and the Federal Reserve. The fact that a lower number was leaked helped "rally" the financial stocks. They were up on the day. That would have helped trigger a move upside in the market if the pipes had been flushed out properly on Thursday. Some people may say that is just speculation, and it is. It is just a theory since it did not happen, but I have seen it happen that way many times before. You have to finish the job.

What is likely to happen? There is more work to be done. No doubt that the rubber band to the downside is stretched over the near term. You have the indices breaking the old trading range and then closing in on the March lows. NASDAQ is close to its 200 day EMA and the SP500 is getting there. If things work out correctly -- and that may seem perverse to you at first when I discuss it -- we would see a further selloff on Monday and maybe through Tuesday. I would expect to see a turn at some point either on Monday afternoon or on Tuesday. That would be near the March reaction low to the Japan tsunami back in this range around the 11th of March. The move down to that point would coincide roughly with the 200 day EMA on SP500. If we get that, we should have a reversal and a very legitimate, tradeable rally that would take the indices back up towards either the early-April peak or the February peak where the SP500 failed two weeks ago and started this tumble to the downside.

Again, any rally likely will not end up at a new high. It will fail at this important resistance range and start to roll back over. It will likely give a pretty decent, reliable rollover signal. I say that noting that in February the market just gapped lower. Again in the start of June, it rallied right up to the start of the month and then showed an engulfing pattern the next day. You may get that kind of a signal, but you know to be on watch when the market gets back up into the range described.


OTHER MARKETS

Dollar: 1.4339 versus 1.4510 Euro. As soon as you badmouth the dollar, it comes rearing back to the upside. It gained ground on Friday thanks to Germany saying it does not agree with Trichet and the ECB on how they want to handle the Greek and Portugal bailout. What a surprise. That is something we have seen since day one. Germany has never wanted to bail those guys out. Every time they say they agree with something, they find a reason not to agree with it.

The dollar posted a nice gain. It was a huge move in currency terms. The dollar has bounced off its 78% Fibonacci retracement level and is doing so with the vengeance. I did not think it had the strength in it, but all you have to do is let Europe be Europe. Next thing you know, it is surging against the Euro and other currencies as well. It has an important top from late May that it will have to deal with, but it sure was an impressive move on Friday.

http://investmenthouse.com/ihmedia/dxy0.jpeg


Bonds: 2.97% versus 3% 10 year US Treasury. Bonds rallied. Even with the gain, it is still in this range. It has been bouncing back and forth, unable to make the real break. It is back to the upper ends of the range, and it is close to that one-day high that broke it out of the range before it fell back in. It has really struggled over the past four weeks to get out of this range. Note that even after a good move, it is not selling off. It is just working laterally. It may be choppy right now, but it is a sign of strength that the bonds have not sold off. Maybe some of the economic news next week can change US investors' minds about the US economy and thus about whether they should be buying bonds. Unless there is a big change, I really do not see the trend for bonds changing near term.

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Gold: $1,529.30, -13.40. Gold was down hard, and it has been bouncing up and down all week long. It is in a lateral move, holding the 20 day EMA. It tapped it on the low and bounced back to close at the 10 day EMA. Still a solid bounce higher. It is losing some momentum but is not losing ground. It is just back-and-forth chop. I expect it to make a run at that prior high. That will be the news, whether it can break this high that it hit in late April and early May. For now it is setting up to try to make that move.

http://investmenthouse.com/ihmedia/xgld.jpeg


Oil: $99.30, -3.33. Oil sold hard. It struggled again when it hit the 50 day EMA. Just as it did to start June, it turned immediately around, sold, and then it bounced up and turned again. It is in a very difficult position, but it will not die. Maybe now it will; it is technically weak. It is hanging in there more than I thought it would. Now we will have to see whether it makes the break up or down. Frankly, I think it is going down. There is not the economic support to keep it up.

If we catch a bit of a break and get this idea in the US that we can actually gain some energy independence by drilling our own lands, perhaps oil prices will continue to come down. Then we will not have to tap into the Strategic Petroleum Reserve as some people say we should do. That would be idiotic. In any event, we have the ability. We could have been drilling five, ten, fifteen, or twenty years ago. They keep saying it will not make a difference, but it would have made a difference. XOM just proved it with this huge discovery in the Gulf of Mexico.

http://investmenthouse.com/ihmedia/xoil.jpeg


TECHNICAL SUMMARY

The market is all about the technical picture right now given that we know what is happening with respect to the economic data. It has been bad going on six months now. The jobs report last week showed that the employment is starting to follow the economic data lower. That is the normal relationship between economic data and the jobs report. The jobs report lags the downturn in economic data; that makes sense.

INTERNALS.

Volume. Internals were relatively impressive as the market sold. Volume moved back up 17% to 1.98B shares on NASDAQ. All the volume is occurring to the downside. NYSE volume moved up 13% to 959M shares. Again, all of the volume is on downside days.

Breadth. Decliners on the NYSE led advancers 4:1. Decliners led advancers on the NASDAQ 3.3:1. Again, the downside days are totally outmanning the upside days in terms of market internals. I will note that new lows are still very much under control at 164 on NASDAQ and 90 on the NYSE.

Put/Call Ratio. The put/call ratio was up again on Friday, closing at 1.18. That means for every call bought, there were 1.18 puts bought. Typically there are a lot more calls bought than puts. Whenever it gets skewed to more puts are bought than calls, that is an indication the market is beginning to get overly negative and a rebound is coming. Just one close over 1.0 is insignificant. Over the past couple of weeks, however, we have had eight closes over 1.0. Over the last three weeks, that would put the number up to ten. We have had several closes over 1.0, and that is a level to get you looking for a turn in the market. All the other factors have to line up as well, though, including the internals. They are getting somewhat negative. The downside is overwhelming the upside. Of course, you also have to look at the technical picture.


CHARTS

SP500. They have broken through their trading range that held for five months and are on the way down to the March low that followed the March 11th Japanese earthquake and tsunami. The 200 day EMA on the SP500 is at 1253. The index closed at roughly 1271. It has 18 points to reach that level. Given it lost 18 points on Friday, it would not take long for it to get there. I expect it to hold somewhere between the 200 day EMA and the Japanese low and then bounce in that tradeable move. Some more downside to start to week, and then we likely get a tradeable bounce out of that.

NASDAQ. The NASDAQ is even closer to its 200 day EMA at 2628. The index closed at 2643, only 15 points away. It is not far from its March low or its 200 day EMA. There is other support in this range as well. We will likely get some kind of bounce after a bit more downside. Massive stretch of the rubber band to the downside. You can see when it has made these kinds of moves before, whether up or down, it has had to pop back afterward.

DJ30. DJ30 has been a leading indicator. It broke below its trading range on Friday. This gets interesting because a lot of people would say it is likely going to head lower and follow the others. It very well could if the pressure stays up. If the other indices reverse, though, we would see a little more downside and a reversal by the Dow as well. Something of a false breakdown that would allow it to break to the upside. I am watching this very closely. It has lagged the selling. It has showed relative strength; therefore, we would be watching for it to make a bounce to the upside as well.

SP600. SP600 shattered the trading range as well, similar to the Dow. The question is whether they can they hold the March post-Japan tsunami low and the rising 200 day EMA, as well as this range of support from December 2010 and January 2011. They are near it. After this selloff, this is roughly equal to other big moves by the index in the past. If it gets another flushout day to the downside, maybe Monday or maybe part of Tuesday, then it will be in position to reverse as well.

SOX. The SOX broke below its 200 day EMA. Disappointing it could not hold that level. You might say this could be a precursor for the other indices. It very well could be. It has also broken below its March reactionary low. Chips are leading to the downside, no doubt. It had a much weaker pattern to begin with, and they will not be a factor to the upside. They may act as an anchor chain as stocks rebound after the oversold condition they have suffered. It looked like the chips may have been trying to make a break as they move laterally. Remember, you would see these gaps to the upside -- strong moves that followed the downside. Looked like it was trying to make the break, but then it rolled over definitively. Now they are below the 200 day EMA. The first index to make that dubious claim on this selloff.


LEADERSHIP

Financial. Financials were the up sector on the day with the bank news. JPM posted a modest gain. It sold off but managed to recover. GS bounced decently. Moved up almost 2% on the day, and it was up even before the news hit. WFC bounced for a second day but not as impressively. It started lower and moved upside, but they managed to recover when that news came out.

Industrial. CAT is using up a lot of its lives on this move to the downside, closing down 2.5%. DE was a bit better. It closed roughly flat on the day, but it looks like it may try to turn back down as well. MMM turned back down. It is going negative again, but it is not a major selloff. It, too, is at a point where it could start to make a bounce similar to the overall indices. UTX looks like it is ready to break to the downside off of this lateral bear flag after the big break lower that cracked its near term uptrend.

Technology. Technology is still struggling, but some of it is holding up. AAPL is back down to its 200 day EMA near the bottom of its range again. It looks like it is at a point where it could make a bounce higher. It is in this triangle, trying to shape up and set up a new bounce. It surely did not look like it wanted to bounce on Friday. CRM is holding at the 50 day EMA. Even with two weeks of carnage, it is holding a key support level. CERN has been weak, but it is not breaking down. It is holding its 50 day EMA as well. We will see if it can hang in there. Thus far, after all of the selling, it has been able to hold that level.

Metals. FCX was down almost 2% on the day. It is still struggling and trying to set up a base, but it is very choppy. STLD is just hanging out below its 200 day EMA. Note how you have the 20 day EMA, the 10 day EMA, and the 50 day EMA heading lower. It is getting close to crossing its 200 day EMA from the upside to the downside. That is a very bearish indication. If we start seeing that in commodities, we will see them continue to sell off (DE is looking to do is same thing at the 200 day EMA. It is still rising, slicing through the 10 day EMA and now at about the 20 day EMA. The 50 day EMA is falling rapidly toward it). BHP looks like it may be trying to find a bottom at its old support range at the rising 200 day EMA. AA is similar, sitting on the 200 day EMA and added some support from where it gapped higher back in late December 2010.

Energy. Energy has been relatively decent. HAL is not surging, but it is holding up rather well. CHK is holding at support. XOM had its big find in the Gulf of Mexico, and it is trying to hold support as well. Some of the smaller ones are hanging in there. BAS is a small oil and gas service company. It is hanging in there, looking decent. CRR is holding in well, also at its 50 day EMA.

Some are trying to hold. I will run through a quick list of stocks from a broad cross-section that are performing quite nicely. ALGN is holding at its 50 day EMA. It is in the health services area. HS is also in health services, and it is holding at its 50 day EMA. ILMN is in drugs, and it is doing quite nicely, holding up very well. COH is trying to hold up as its 50 day EMA. With all of the carnage, these stocks are still making a stand at a reasonable support level. CTXS is holding at its 50 day EMA as well. RMTI is in health services, and it is moving to the upside quite nicely. SEM is holding up very well.

I will throw out a few more. WBSN held at its 50 day EMA and is bouncing. EC is independent oil and gas. It is making a little test of a nice break to the upside. It could be ready to move higher next week. VHC is in software. It is holding a nice break higher, forming a pennant. There are many stocks still in great shape and ready to move. We just have to see if they can expand and provide some upside leadership to help pick the market up and bounce it back to the upside.


THE ECONOMY

Exxon discovery should help our leaders discover we can wrest energy independence from our enemies versus taxing gas an extra dollar to make us buy cars we don't want.


TO VIEW THE ECONOMY VIDEO CLICK THE FOLLOWING LINK:

Flash: http://investmenthouse1.com/ihmedia/f/eco/eco.html


THE MARKET

VIX. The VIX is one area that has not been making much sense if you suspect that selling leads to an increase in volatility. For the past six weeks, SP500 has made a tremendous run lower (relative to the move higher). It sold sharply and especially hard the past two weeks. When the selling started, the VIX did pop off the top of its trading range, but that was it. It just moved laterally until Friday when it did bounce up and tap the 200 day EMA at the top of its range. Will it make a breakout now? It likely would if the market continued to sell, but the fact that volatility is not moving anywhere just means that investors are ensuring the downside for very little. They do not think there will be that much downside. That can be a problem because it can be a contrary indication. If everyone thinks the market will hold and bounce, that is typically when something else happens, such as the bottom falling out.

The VIX is pretty good at showing relationships and does not look like it wants to break higher. That would suggest that the market is going bounce. That is something I talked about last week. It just has not done it yet, but I will be watching because we are approaching a new support level that could bounce the market to the upside. The volatility is suggesting that there will be a rebound. It suggests that because it is holding its range despite the sharp selloff in SP500 and the other indices. They have not held their range, yet volatility has held its range. As the indices approach support early this week, that tells me they can put in a very tradeable bounce to the upside. Again, it would just be a bounce until proven otherwise.

VIX: 18.86; +1.09
VXN: 19.85; +0.97
VXO: 19.3; +1.32

Put/Call Ratio (CBOE): 1.18; +0.12


Bulls versus Bears:

This is a reading of the number of bullish investment advisors versus bearish advisors. The reason you look at this is that it gives you an idea of how bullish investors are. If they are too bullish then everyone is in the market and it is heading for a top: if everyone wants to be in the market, then all the money is in and there is no more new cash to drive it higher. On the other side of the spectrum if there are a lot of bears then there is a lot of cash on the sideline, and as the market rallies it drags that cash in as the bears give in. That cash provides the market the fuel to move higher. If bears are low it is the same as a lot of bulls: everyone is in and the market does not have the cash to drive it higher.

Bulls: 40.9% versus 45.2%. Finally heading down at a good clip as more and more bulls throw in the towel. Finally getting the harder drop we mused about last week. Well below the 5 year high at 62.0. Fading back from the level considered bearish, i.e. where so many are in the market and believe it is going up that the ammunition to send it higher runs low. The crossover level at 29% bulls from July 2010 is long gone. 35% is the threshold level suggesting bullishness. To be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 22.6% versus 20.4%. Continuing the rise. Easily past the 18.5% registered a month back. Moving up on the 23.1% to start April. 28.3% in September 2010, just as the market pulled out of that base. Still well below the 35% level, above which is considered bullish for the market overall. For more reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.


NASDAQ

Stats: -41.14 points (-1.53%) to close at 2643.73
Volume: 1.988B (+17.01%)

Up Volume: 200.82M (-731.45M)
Down Volume: 1.45B (+966.53M)

A/D and Hi/Lo: Decliners led 3.3 to 1
Previous Session: Advancers led 1.62 to 1

New Highs: 24 (-6)
New Lows: 164 (+42)

NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg

NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg

SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg


SP500/NYSE

Stats: -18.02 points (-1.4%) to close at 1270.98
NYSE Volume: 959M (+13.36%)

Up Volume: 709.61M (-1.83B)
Down Volume: 3.03B (+2.264B)

A/D and Hi/Lo: Decliners led 4.1 to 1
Previous Session: Advancers led 1.74 to 1

New Highs: 48 (-20)
New Lows: 90 (+21)

SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg

SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg


DJ30

Stats: -172.45 points (-1.42%) to close at 11951.91
Volume DJ30: 178M shares Friday versus 150M shares Thursday.

DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg


MONDAY

Next week is a full week. As far as news, economically we have Retail Sales out on Tuesday. The PPI is also out on Tuesday. CPI and New York Manufacturing are out on Wednesday. Also out Wednesday are Industrial Production and Capacity Utilization and Inventories. On Thursday we have Initial Claims followed by Housing Starts and Building Permits and our current account balance. The Philly Fed is always important. On Friday we have Michigan Sentiment and Leading Indicators.

Some of the polls out like the Rasmussen Poll show that Consumer Confidence dropped eight percentage points just in the past week. Of course, that came after the jobs report when everyone was concerned about the state of economy. It is very important data, and it is having an impact on the psyche of the American citizen. There are the high gas prices, weakening economic conditions, and the stock market selling back. Things are piling up, and it does not help the already beleaguered consumers when Sentiment starts to decline. The economic calendar tonight is courtesy of briefing.com.

I believe there will be some continued downside to start next week. After all, the market closed just about on its low on Friday. It was looking very weak and unable to rebound and further the Thursday move. Thursday was a flawed move because instead of opening lower and clearing the system for a move higher, it opened higher. That just invited the sellers to come back in. Indeed, they invited their cousins and aunts and uncles, too; they all crowded in and pushed volume to the upside on the Friday downside session.

I do believe that there is an oversold condition that will be released to the upside. That is why we were taking a little bit of gain on Friday from some of our positions. We will let the others (SPY, QID) continue to the downside. If this baby rolls as I think it will and starts to bounce back up, on Monday we will take some more of those gains. At some point on Monday afternoon or Tuesday, if it starts downside, it will start to make the turn. We can then close out some more of our gain on our downside positions. Then maybe we can take some upside positions once more and see if they will work this time.

I believe there is a tradeable rally coming off of this. I have seen it many times before in these kinds of setups. It does not mean it will move to a new high or take out the old highs. It just means I think will it bounce from around the 200 day EMA on SP500 back up into the early-April peak or the early-March peak. It even could be the February peak before it would stall out. That is a very tradeable move that can make us money. We close out our downside, after a good surge that is down again, that comes near the March low or the 200 day EMA and starts to hold and looks like it will bounce. Then we can pick up some upside. We let our continuing upside plays run. The ones that are holding after this kind of carnage will locally hold up. Many on the report are doing that. They may give another head fake down through support, but then they reverse. The odds are they will reverse after this kind of selling and at least give us a better exit point. We might do quite well on some of them.

We will let them rally. When that move peaks out, as I would expect in this range, then you sell those that are not some of the aberrations that are just holding up well and are streaking higher. Then you get ready for a downside play again. That is the market we have. That is the life we are living now, given that the trend to the upside looks to be in jeopardy. It is in jeopardy for a number of reasons. There are weakening economics and a Fed that will not go on with a QE III. It should not do that. This move, and indeed the move before it back to March 2009, is all rather false. It is all a liquidity move fed by the huge injections of liquidity that the Federal Reserve has put in the system.

We have not had any real economic growth to justify this move. Economic growth is stalling. There are two sides to this story. It is either fading into oblivion right now, or this is just a summertime pullback and things will be better. In reality, it is likely somewhere in between. I doubt we are going into a Great Depression, but things could be very ugly given the food situation as I discussed in the Thursday report. There are other problems, too, like our debt. If we do not take major steps and get back to capitalism, we are likely to lose the dollar as the reserve currency. The dollar would then plunge, similar to when the British pound lost 90% of its value after losing its status as the reserve currency post-WWII.

It is not a pretty picture. If those scenarios transpire, it could get truly ugly. We just have to take things as they come. We have to play the market with what it gives. Right now it does not look great. It looks like it is topping out for a deeper decline. Before that, we know it will not go in a straight line. After this kind of selling, you get a tradeable move. That is what we will look for to the upside. Then we will play a tradeable run to the downside that may take out that March low and ends up giving back this entire December-February run. We will just have to see what it brings us.

Things are negative now, and we are going to play from a defensive, downside standpoint. We are looking to make money on runs upside and downside. Just being aware that we are not in this kind of trending market anymore. This is a bigger top. That was a quick top, rolled over, sold and went into a base. Here we tried to base, and that base broke out but failed. We have a bigger top here. Nothing like we have had on the move up off of the March 2009 low. That is what suggests something is significantly different this time around.

With that in mind, let us keep our heads in place. Know what the market is doing and do not get too upset about the fact that the market is up or down. Just use the market to make money. That is why we have the downside plays in place. We are using it to make money as it is sold. After we get this rebound, it will probably be a lot more downside, and we probably will not have much more upside. Although, there will be defensive areas we can play such as the healthcare stocks. They have been holding up well, and then there are others that may perform.

Energy might be a sleeper. It may be surprising how well it holds up because of the discoveries we have that show we still have a lot of energy around us. It may actually become popular in the US, if we can beat the propaganda, to try to gain relative energy independence using fossil fuels. The US citizenry could discover that we do have significant amounts of oil still within our borders. Of course we should not been giving our rights away to Brazil. The idea that we would want to sell our rights to them and then buy the oil back is insane. But a lot of what Washington does right now is insane; it makes insanity seem almost normal.

Long story short, energy could be positive. We will have to see what the market yields. We will see what groups hold to the upside that we can play in what looks to be an otherwise negative market in the foreseeable future. I am not talking about years out, but just as we plan for the summer and into the fall. Have a great weekend!



Support and Resistance

NASDAQ: Closed at 2643.73

Resistance:
2676 is the January 2010 low
2686 is the recent January 2011 closing low
2706 to 2705 is the April 2011 low and the February 2011 and consolidation low (bottom of the trading range)
2723 to 2705 is the range of support at the bottom of the January to May trading range
2759 is the May low
2762 is the February low
The 50 day EMA at 2768
2796 is the February gap down point
2816 is the early April peak
2825 is the 2007 closing peak.
2841 is the February 2011 peak
2862 is the 2007 peak
2888 is the May 2011 peak
2956 from November 2000
3026 from October 2000 low
3042 is the May 2000 low

Support:
2645-2650ish from December 2010 consolidation
The 200 day SMA at 2628
2603 is the March 2011 low (post-Japan low)
2580 is the November 2010 closing high
2569 is the November gap up point through the April 2010 peak


S&P 500: Closed at 1270.98
Resistance:
1275 is the January 2010 low, early January 2011 peak
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1313 from the August 2008 interim peak
1318.51 is the May low
The 50 day EMA at 1318
1325-27 is the March 2008 closing low and the May 2006 peak.
1332 is the early March peak
1340 is the early April 2011 peak
1344 is the February 2011 peak is being challenged again
1364 is the March 2007 low
1370 is the August 2007 low
1371 is the recent May 2011 peak

Support:
1255 is the late December 2010 consolidation range
The 200 day SMA at 1253
1249 is the March 2011 low (post-Japan)
1235 is the mid-December 2010 consolidation low
1227 is the November 2010 peak
1220 is the April 2010 peak


Dow: Closed at 11,951.91
Resistance:
The 50 day EMA at 12,342
12,283 is the March 2011 peak
12,391 is the February 2011 peak
12,605 is the mid-May 2011 high
12,876 is the May high
13,058 from the May 2008 peak on that bounce in the selling

Support:
12,110 from the March 2007 closing low
12,094 is the April 2011 low
11,893 from March 2008 closing low
11,867 from the August 2009 high and peak on that bounce in the selling.
11,734 from 11-98 peak
The 200 day SMA at 11,687
11,555 is the March low
11,452 is the November 2010 peak


Economic Calendar

June 10 - Friday
Export Prices ex-ag., May (08:30): 0.5% actual versus 0.9% prior (revised from 1.0%)
Import Prices ex-oil, May (08:30): 0.4% actual versus 0.6% prior
Treasury Budget, May (14:00): -$57.6B actual versus -$59.0B expected, -$135.9B prior (no revisions)

By: Jon Johnson, Editor
Copyright 2011 | All Rights Reserved

Jon Johnson is the Editor of The Daily at InvestmentHouse.com

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