June 21st, 2012
in Gary's blogging
Closing Market Commentary For 06-21-2012
To say this was a down day doesn't describe it decent well. Even though there were pauses along the way signaling a possible bottom, it just kept on falling. AA great day if you were short even though the RRR (risk reward ratio) wasn't the greatest for day traders, swing traders that got in yesterday have done alright so far. The 'blame' for the decent is that were pushed lower by disappointing economic data from China and Europe. Well, we already knew that and we know it is going to get worse.
The DOW closed at 12573 down 250 or -1.96%.
The 500 closed at 1325 down 30.18 or -2.33%.
$RUT closed at 764.83 down 19.22 or -2.45%.
SPY closed at 132.39 down 3.09 or -2.26%.
The trend is down and the current bias is down.
WTI oil is at 78.27 trading between 81.00 and 78.24 and the bias is negative.
Brent crude is at 89.15 trading between 92.50 and 89.00 and the bias is negative.
Gold is down today at 1565, trading between 1601 and 1564 with a negative bias.
Dr. Copper is at 3.30 down from 3.35 earlier.
I don't have much to add today as one down day doesn't make a bear market.
Today wasn't the worst plunge in the stock market so far this year... It was the second-worst by a whisper. And just like that we are one third of the way down to Goldman's target.
But everything is priced in? It seems that between the realization that global growth may actually be slowing (between China PMI and this morning's Philly Fed) and the recognition that there is no-QE-without-a-crash, markets began to lose steam early on this morning (led by energy names crushed by the biggest two-day drop in oil in over 9 months).
Then Goldman's timely note to short the market if you want Bernanke to act (and the rumors of pending global bank downgrades) sent us over the edge as the S&P lost its upchannel and plunged (down over 40pts from its highs of Tuesday).
The Dow is following a very worrisome pattern (echoing last year far too well) as it lost the second most points in the year. Gold (and the rest of the commodity complex - led by WTI -7% this week) fell notably as the USD surged to up almost 1% on the week.
Gold's and USD's moves suggested further pain for the S&P as Treasuries stabilized at notably better levels and did not plunge on the day (though much of this is equities playing catch up to a longer-term dislocation). VIX jumped over 3 vols back over 20% (as perhaps the jump in implied correlation we highlighted was on to something).
The SP500 at the close. A nice drop, but not unprecedented and could fall a bit further before taking a breath of air. Watch for a pause tomorrow morning when considering any buying considerations.
The $RUT at the close. Like the 500 and the DOW, the Russell 2000 closed way below its 50 day MA making a decisive statement, but remained above the 200 day MA.
The DOW at the close. The DOW has made wide swings before and is not necessarily dictating a trend.
Something else to watch for tomorrow as any negative announcement could trigger another sell-off.
Mario Monti's government is teetering (read Berlusconi's interview yesterday), and he may need a home run at tomorrow's summit in the form of a major concession from Germany to survive. Things haven't gotten off to a good start, with the Bundesbank today rejecting a piece of the Monti plan to support peripheral bond markets.
Our Premium Subscribers have been briefed on tomorrow's plan.
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Written by Gary