Yesterday’s Action

by Dan June 14, 2011 7:58 am • Commentary

It was a bit of a mixed bag yesterday with the SPX closing up small for the day, as Financial stocks, particularly the banks held gains from Friday….. tech and industrials were mixed, but generally weak, with the SOX almost closing down 1% and stocks like F making fresh 8 month lows. It was odd to me that while the dollar took a little breather from it’s recent rally vs the Euro, that gold and crude oil were also down.

Crude’s 10% plus sell off from the recent highs made in early May should be a positive for companies who have been struggling with rising input costs that have been hurting profit margins, but some market participants see it a little different……the wider perception from a macro view is that the sell off in crude signals a weakening demand from emerging markets, particularly China and Brazil and that if growth slowing there it will clearly hurt our exports which have been buoying our economy of late.

SPX held some near term support (1268 Friday’s Intra day low)….and trying to put in a near term bottom……as I have been saying in this space for a couple of days, be worried about a little snap-back rally as we are a little oversold near term…..keep trimming shorts and leave some ammo dry, as any rally could be a good opportunity to lay out shorts again into some strength as we approach q2 reporting season.

The S&P futures are up 70 bps this morning in sympathy with Asian and European markets that are/were up on a stronger than expected industrial production number out of China and inflation data, that while high wasn’t above whispers….Shanghai Comp’s overnight rally is from a very oversold level and I am not sure that the increased tightening overnight with the inflation data is all that positive in the near term.  Most importantly for our markets though will be how we react to our won economic data due this morning….PPI and retail sales at 8:30 and Business inventories at 10am. If our data causes us to lose the premarket gains then we may get a sense for which tail is wagging the dog……I see 1290 as a resistance level to the upside and a close above could signal a broader re-tracement…..As always move your feet and look for opportunities in some oversold names like my suggestion posted yesterday in ORCL.