Neg eco data
Yeah, we got a surprise and it wasn't a positive!.   A thud in US retail #’s, a contrast to other inflow of data and implications for Q2 consumer spending down revisions.   Add disappointing Euro & China eco data and global markets have an excuse to take profits.

Absorption
Journal headline the other day has turned into a over supply of new issuance as a influx of paper comes
to market from all corners now (commods’ , casinos, energy etc.) besides all the financial paper.   Nobody
wants to be left out and May has become the largest offering month ever and we’re only ½ way through
the month!.   Can the market absorb all this?.   It’s highly unlikely if more and more comes to the market. This is a concern now.   What we don’t like about this is you need to take out profits from equities to pay for this!   A profit taking rotation of sorts, including into US tsys from equity profits is occurring.

Technical
A number of technical supports taken out in a sweep!.  SPX809, the shortest trend line on gap down and than the 891-894 uptrend many are following. As the market slides further the shorts begin to get comfy in pressing new positions. They did this with NAS100 first. SPX880 is 20MA and next level to watch.  A problem today is as some shorts start to press and there was no evidence of institutional buying support. A double or maybe triple whammy of sorts. Increasing short activity + profit taking (inc. supply issue) + lack of institutional buy (underlying bid) today.

We said,  we’ll only know for sure later down the line if our blow off top note comes to fruition. Looking back 5 trading days when the platform lid up like a XMAS Thursday premkt , including garbage stocks as usual have spelled an end to a big rally and a correction. It’s irrelevant if it’s a blow off top or just a regular temporary top.   A correction is a correction and its hardly a surprise as we outlined this weekend DJIM #19.   So far, we like that fact a 5% correction  has been orderly and a usual correction is 7%-10,  so we could get a bounce very soon around here.  The SPX seemed to base for about 3 hrs yesterday at these levels ~885-880.   Maybe it seems civil to us because we’ve been excluded from most of the downside since as we were apprehensive of the goings on.  Last week,  we warned we didn’t like the action in Tech (Wed-Thur) and wondered who can possibly lead as it’s not going to be the financials or tech at that point.    We also worried about this spreading to commodities and hitting high beta stocks/ groups, which it has.

What is critical is not to have this pick up speed, which would occur with shorts getting cocky, more profit taking and the lack of an underlying bid coming back.

We’d look for any upside bounce to be a traders call and not those looking for the pullback to buy for longer term.  Let's get an under 600k claims tomorrow and throw the shorts entering yesterday for a loop!