MyHappyTrading's  Instablog

In my Market Forecast this weekend, I talked about the market testing SPX 880 and Nasdaq 1750.  We have arrived at those levels.  The market was weak from the start and sank lower as the day went.  Most sectors were down, with techs leading the drop.  GOOG and RIMM both lost more than 3%.  AAPL fell 2.32%.  Commodity and financial sectors continued to slide.  This morning, CFTC (Commodity Futures Trading Commission) released a statement saying that it will hold hearings in the next few weeks to discuss a possible clampdown on excessive speculation in energy and commodity trading.  ICE and CME were hit particularly hard.  ICE slumped almost 11% and CME lost 5.11%!

We cashed out some more of our downside plays today:
July 07, 2009
12:59 | HappyTrading BIDU ($276.00) Sold to Close BDUSX Jul 280 put, at $11.30 +23%
12:58 | HappyTrading MA ($161.00) Sold to Close MALSM Jul 165 put, at $6.20 +27%

The Dow finished down 161.27 points; SPX slipped 17.69 points; Nasdaq stumbled 41.23 points:

Commodity sectors fell further: OIH (oil services) -3.28%; GDX (gold miners) -1.16%; XME (metals and mining) -2.34%; XLE (energy) -2.56%; USO (oil) -2.59%; UNG (natural gas) -3.03%.  PBW (clean energy) dumped 4.05%.  SOXX (semiconductors) led the techs with a 2.89% fall.  FXI (Chinese ADRs) dropped 3.59%.

SPX

SPX lost 17.69 points to close at 881.03.  Its daily MAs and MACD all went lower.

Nasdaq

Nasdaq tumbled 41.23 points to close at 1746.17.  It closed below the 1750 level.  The MACD was down.

In last night's article, I said, "Although today's bounce, after the morning weakness, was certainly encouraging, things still look a little weak."  Indeed, the market fell further today.  SPX barely closed above 880 and Nasdaq dropped below 1750.  We can see a new "bearish" formation in the daily MAs on SPX's chart.  We have also been discussing VIX testing 30.  VIX managed to close above 30 today.  We could see it test 32 tomorrow.  Then, VIX may need a rest before deciding which way to go next.  AA's earnings comes after the market on Wednesday.  If it misses the estimates again, it could trigger more selling in the mining stocks, which would likely drag SPX below that 880 support level. 

The market is certainly testing the lower end of the recent trading range, and, we are playing along on the downside with the market's momentum.  If the support levels don't hold, we should see the downward momentum accelerate.

Good night and HappyTrading! ™