SP 500 Futures and US Dollar Intraday

I cautioned in yesterday's commentary, with the metals charts, that a short term bottom might be at hand. The sentiment was getting overdone and the usual book talking suspects were spreading gloom and doom with gusto.

Since the end of May the US equity market has been in a downtrend, and selling the rallies has 'worked.'

So, is it time to sell the rally again?

Keep an eye for a breakout attempt. A key level would be 1295 for conservative purposes, but they have to stick a close and follow through. It may take more than one step to do it, to allow for a fakeout to suck more of the bears into an offsides position for the setup.

Then again it could simply fail and go back to retest the low. It is hard to say what will happen when great events are in motion, and the house and a few big players are in collusion.

One can use a number of charts for confirmation of a move by the lead dog, the SP. The dollar has proven to be particularly effective lately in addition to the usual suspects like NDX.

The big TBTF and their funds are batting the US financial markets (and the public) around like their favorite chew toy. Failure to reform the financial system is Obama's single greatest fault, overshadowing even his military adventurism perhaps. I do not think he is 'bad,' but merely weak, lacking in character, and not rising to his call to greatness. A very modern man. He could have stood out well since he is surrounded by amoral puppets and stooges, some in his own house but particularly in the opposition. But he has a fatal attraction of trying to please everyone, and therefore no one, lacking principle and conviction, and therefore remarkable leadership.

I have to chuckle when people send me simple indicators available on public charts, or the comments from people who are obviously talking someone else's book in order to prove some assumption they hold without any underpinning or foundation. I take this a few times, since everyone is entitled to be wrong, and then invoke the spam filters if it become distracting. A small price to pay for the real gems that wash up on the shores from those who have learned to think for themselves, and the genuine souls who struggle on in this troubled world.

It is important when playing for money not to allow distractions to affect your play. You are responsible for what you read and where you spend your time. I learned this lesson some many years ago in a different, more exuberant phase of my gaming career, from Lyle Stuart.

"He names names because he knew everyone. And everyone knew him. In his stories, he relates the occasions when he won big but also admits when the cards were going against him and he left the table a loser. But he always left the table before he lost everything." John Patrick on Lyle Stuart

If you cannot maintain the discipline required to trade you should do something else. Most (close to 95%) are not equipped for this, and should ride the long trends as investors, and not worry so much about the daily noise. There is no school for this, you must learn by experience, so you can own your decisions with some understanding and conviction.

In the end the market will teach you humility, and this is a particularly instructive market, being artificially constructed and rife with information assymetry, manipulation of the rules, and deception.

But the trends are resilient, if one has the eyes and the grace to see them.

Gold Daily and Silver Weekly Charts

Precious metals were under pressure throughout the US trading session. The bear raids started early on Sunday evening but gained footing during the NY trading session.

I think the silver chart *might* be clarifying a bit here, but we will have to see where it finds its level in order to peg the new levels of resistance and support after the parabolic run up which very possibly was a calculated maneuver designed to break the bull market trend before it leads to a Comex default.

Gold was pressured by China weakness and the bears took the opportunity for another raid when SP downgraded Greece to CCC.

The gloom seems rather thick here, and the common sentiment is overwhelmingly bearish. It does seem overdone as we might see at a market turning point near the bottom of a resistance channel.

At the end we have to accept the verdict of the market, at it is deliberately given over time. Always.

But I have to note that those who are quite often wrong because of a fundamental lack of economic and market knowledge are becoming increasingly noisy and emboldened lately, trotting out old tired arguments and worn predictions, and this is sometimes a sign that the tide is turning.

It is option expiration week. Let's see what happens.

SP 500 and NDX Futures Daily Charts

Slowdown fears for China and a downgrade of Greece's credit rating put some headwinds into the market that started out on the bullish side based on another 'merger Monday.'

What next? This is an option expiration week, and the bulls are looking for an excuse to rally. They have not been able to find a footing yet, and so the market continues to trend downward despite brief buying flurries with no sustained volume.

The trend will continue until it does not. Be on the defensive here. I am shifting to a more neutral posture until I see if stocks can break down further however.

SP Follows Chinese Dagong Agency, Cuts Greece to CCC Rating, Negative Outlook

Interestingly enough, the SP move trails the Chinese Dagong Ratings Agency which cut Greece to CCC on June 3.

Dagong downgraded the UK last month and has cut the US to A+ last year.

Reuters
SP Downgrades Greece, Says Default Likely

Greece on Monday became the country with the lowest credit rating in the world after Standard & Poor's downgraded it by three notches, saying the agency would consider a likely debt restructuring as a default.

A restructuring of Greece's debt -- either with a bond swap or by extending maturities on existing bonds -- looks increasingly likely to be imposed by European policymakers as a means of sharing the burden of Greece's crisis with the private sector, S&P said in a statement.

"In our view, any such transactions would likely be on terms less favorable than the debt being refinanced, which we, in turn, would view as a de facto default according to Standard & Poor's published criteria," the agency said.

In such a case, S&P added, Greece's credit rating would be lowered to "selective default," or SD, while the ratings on the country's debt instruments would be cut to D.

S&P cut Greece's long-term sovereign credit ratings to CCC, just four steps away from default, from B. The short-term rating was affirmed at C and all the ratings were removed from credit watch.

The outlook on the long-term rating remains negative, however, in a sign that another downgrade is likely in the next 12 to 18 months.