Merkel Cancels Meeting Sends Stocks off the Lows of the Session

The morning got going with GDP coming in-line with expectations. Putrid growth of 1.9% was in-line with expectations, but far from where we should be 3 years removed from 2009 lows. Shortly after the market opened the Supreme Court upheld Obamacare and the market got interesting. Stocks ended up heading lower after creating a bit of intraday volatility. Nearing the end of the day it appeared sellers were about to unleash on stocks, but Angela Merkel had other ideas. Sending the EURUSD currency pair higher, Merkel canceled her press conference and sent US stocks well off their lows. Hope is still alive the EU summit will produce a solution to European lows. The underlying story of the day was the brutal beating leading stocks took during the day. Big Wave Trading remains in sell mode and today’s craziness confirms our market model. The crazy moves the last two days at the closes on rumor is quite astounding. Yesterday we had the Supreme Court decision shooting down Obamacare. Now, we get Merkel cancelling a press conference and the European Union is saved for another day? Debt on top of more debt is not a solution and at some point hits the point of diminishing returns. Tomorrow, despite the bar being set low will certainly provide some more fireworks. After-hours today RIMM reported terrible earnings as the company continues its downward spiral. It is no surprise the stock continues moving lower. NKE on the other hand was a leading stock and its after-hours action is very troubling. UA another leading stock was hit in sympathy and not to mention has broken down lately. It is never a good sign when leading stocks get hit hard. There are other leading stocks breaking down leading us to be very cautious. We are in sell mode for a reason and until the market can turn around with leading stocks we’ll stay in sell mode. Next week we’ll get holiday trading with the fourth of July landing smack-dab in the middle of the week. Get out and enjoy the weekend!

Stocks End Recoup Some of Monday’s Losses; Volume Mixed

The markets did their best to rebound from Monday’s sell off, but fell short. Volume ended mixed on the day with the NYSE volume coming in lower and the NASDAQ coming in better than Monday’s levels. Economic data was disappointing with Consumer Confidence and the Richmond Fed disappointed with lower than expected readings. Case-Shiller report on housing was better than expected, but still showed housing prices fell overall. Today’s market closed was a bit disappointing as the major indexes clsoed off their highs. While today’s green close is a step in the right direction there is much more work to be had if this market wants to rebound. Angela Merkel’s debt sharing comments did send stocks immediately lower, but the market was able to rebound and push higher. Perhaps mutual funds looking to deploy cash for month end reporting had something to do with the move, but anything is possible. The action today was very much like Friday’s market action trying to recover from prior day losses. We remain in sell mode despite the rally today. Tomorrow we get durable goods figures at 830 followed by pending home sales at 10am. However, market pundits will likely look to Thursday’s arrival for first quarter annualized GDP figures. The market is looking for growth of 1.9%. Our economy is not humming along as it should and worse of all we are bumping up against the business cycle. Every 4-6 years the economy enters into a slowdown and by all indications our economy is about to enter into one. Any disappointment should usher in lower equity prices, but we’ll simply follow where the market will take us. Who knows? A very negative number could usher in a new round of quantitative easing! In the end price matters and rules above all else. Price destruction going on with European stock indexes is quite extraordinary. Germany, Spain, and Italy are three looking mighty vulnerable at the moment. All three remain in downtrends and especially scary is the German DAX index. The Germans are the ones holding up the Euro and with the weakness in their stock market certainly speaks volumes. Europe will drive a lot of the conversation and certainly will weigh on the minds of traders globally. Cut those losses short and enjoy the ride.