SP 500 and NDX Futures Daily Charts - Down to the Bottom of the River

Not a strong close for the month to say the least.

Traders were not interested in hold long positions over the weekend.

See you on Monday.

SP 500 and NDX Futures Daily Charts

We get the third estimate of US Second Quarter GDP on Thursday but otherwise the domestic news is light, and US markets are being dominated by sovereign debt concerns in Europe.

SP 500 and NDX Futures Daily Charts - Rough Seas and Investor Vertigo

Big drop in the US stock market on European jitters and recession fears.

Markets are starting to look for support here, with biggest tell in the NDX. Let see how that develops.

Potential 'island top' in the Vix.

Then again, things could continue to deteriorate. But the probability is that unless we are going to hell in a handbasket, the wiseguys are already starting to buy back in.

SP 500 and NDX Futures Daily Charts - Significant Downside Risk and Bank Downgrades

Stocks sold off sharply and went out on their lows as the Fed did exactly was was expected, no more no less, but went on to cite 'significant downside risks.'

Given the downgrades of US and Italian banks this was too much for trader's to take, and there was a flight into the dollar and Treasuries, the latter at least in part as a reaction to Operation Twist which will be buying in the 6 to 30 year Treasuries.

It will not surprise me to see a rally tomorrow, grinding higher perhaps after a weak open, and gaining momentum after the European close. Or perhaps I am just being too cynical. So let's see what happens.

SP 500 and NDX Futures Daily Charts

Markets sputtered on light volumes and largely technical trade ahead of the Non-Farm Payrolls tomorrow.

Consensus of economists is +110,000 jobs for non-farm private payrolls, and +70,000 overall including government.

I am of an open mind to see the equity market react perversely to a low number tomorrow. It would be one of this reactions that says, 'since the number is bad, then the Fed will ease and so stocks can rally.'

Or not. This is an iffy one especially because it comes in front of a three day holiday weekend.

SP 500 and NDX Futures Daily Charts - Coiling for a Move

Volatility remains elevated, to say the least, and the major indices appear to be 'coiling for a move,' as they say.

Hurricane Bernanke may provide whatever is required to make that move happen tomorrow, either by what he does, or does not do.

I would look for some aftershocks from this in the coming weeks as additional economic data rolls in.

I ended up NOT going short stocks, since playing the dip in gold and some miners today and flipping out of them into the close provided a more than sufficient amount of short term kicks, bangs and thrills. I had to remind myself that I am not a daytrader these days, and such extravagant profits are often illusory, being quickly dissipated by losses.

SP 500 and NDX Futures Daily Charts - Worries About the Double Dip

I noted yesterday that the failure to rally appeared a little ominous.

Stresses in the European banking sector had worried of another Lehman like spike in LIBOR and a eurodollar squeeze had the markets off balance all night.

The US market went down on weak economic new in initial claims and company prospects, but the Philly Fed came out with a dramatic contraction, and that sent equities tumbling and Treasuries soaring.

There was a pronounced flight to safety in the dollar and especially gold.

Tomorrow is option expiration, so the real market action will show up after the opening trades. Keep your eye on support levels.

SP 500 and NDX Futures Daily Charts - VIX - SELLOFF! - Fresh Calls for QE3

There was a major selloff in Europe and the US today as fears of slowing economies and a sovereign debt crisis intensified.

There was a flight to safety in the dollar and Treasuries, and early on in gold. But the price rise in gold and silver was cut short as selling increased and it turned into a general liquidation.

Non-Farm Payrolls will be released tomorrow morning.

The Federal Open Market Committee will be meeting next Tuesday. The cynical part of me suggests that this week is a setup for QE3.

SP 500 and NDX Futures Daily Charts

As much as one can be, I was a little impressed that the NDX reached down to hit the support level I had drawn last Friday, some distance from where it had been. And the SP has also fallen to clear support.

These short term trends are now a bit extended, but the eyes will be on the economic data, especially the NonFarm Payrolls on Friday, and not the buffoonery in Washington with the Tea Party and the bought and paid for politicians.

There really is only one solution, and the prerequisite is political campaign reform. Partisanship is poison. But change cannot occur in times of influence peddling, bribery and corruption. So things must get worse before they get better.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained recovery.

SP 500 and NDX Futures Daily Charts - VIX - Daytrader's Delight

A big swing in the stock markets today, as they opened much higher, and then plummeted on the ISM report, and more jitters about the deficit faux deal.

NonFarm Payrolls at the end of the week. See the comments intraday below.

SP 500 and NDX Futures Daily Charts - VIX Calm Despite Lies and Hysteria

I think the toughest trade might be to decide what to carry into the weekend.

I can't recall this amount of bare faced lying and misleadingly hysterical headlines in quite some time. Well, that's a currency and class war for you.

SP 500 and NDX Futures Daily Charts - VIX Remains Subdued - Short Term Overbought

Fairly disappointing Jobs Report, but Wall Street has its eye on earnings season and the puffed up corporate numbers that will start rolling out next week.

Watch out for the short term noise, and keep your attention focused on guidance, rather than current numbers which are two parts accounting fluff and three parts Fed subsidies.

If the consumer is not healthy, American business will not be healthy. The effects may just show up with a lag.

Additionally, I have included the daily cash charts of the SP 500 and the NDX with some indicators that seem to suggest that the markets are overextended for the short term, and are ready for some consolidation and perhaps a pullback after this amazing run higher. It can of course become even more overbought in the short term.

SP 500 and NDX Futures Daily Charts - VIX

Market is ignoring bad news and is focused on the Non-Farm Payrolls Report on Friday, and the beginning of earnings season next week.

SP 500 and NDX Futures Daily Charts - VIX Drops to Lows, Zynga Files $1B IPO

A coincidence of the Greek crisis and the end of QE2 had a lot of bears leaning into the short side of the market. When Greece was finessed for the short term, and the end of QE2 did not produce the forecast immolation, the short term trends turned sharply, and it was 'risk on' with the dollar and gold and bonds weakly falling and stocks soaring.

So what next? In the short term this equity move looks a bit overdone, but until volumes pick back up it may drift even higher unless something happens. I think it would be hard to be too cynical about this market and the US governance model in general. Lies, easy money, oath-breaking, and double dealing seem to be prevalent.

Zynga Files One Billion Dollar IPO

Late breaking Friday after the close news, the SEC is escalating their investigation of St. Joe's and names chairman Bruce Berkowitz.

Overall the problems in the economy and the financial system are not being dealt with effectively at the source, and the coverups continue. Any time a reform, or even an assertion of the law and justice, is undertaken, the financiers respond with threats of crashing the economy. This is due in large part to their faithful servants in the Republican and Democratic parties, and the weak-kneed American president.

Have a pleasant holiday weekend Americanos, and we'll see how Asia opens on Sunday evening your time.

SP 500 and NDX September Futures Daily Charts - VIX

Eyes are on the Greek bailout vote.

Light summer volumes.

The US equity markets are coiling within obvious symmetrical triangles. They will break up or down, and that break *should* mark the next leg once confirmed by a daily close or two.

The SP 500 cash market has been finding support around its 200 DMA the past week. Traders are watching this carefully, as well as VIX, for the signs of an impending break lower.

I did add some index shorts intraday.