DJIM #22 2009
Monday, June 1, 2009 at 06:46AM 
The majority of those interested in the market just look at Fridays box score and see a good close near May highs. This is all that matters!. A minority since 4:00pm Friday were trying to reach Oliver Stone and give their conspiracy theories to the action in the last few minutes of the market as seen in the above chart. Some of their proposed movie scripts include Rogue trader fat buy finger, hedge fund imploding, TARP monies flooding the close, GS painting the close, Robots as in computers only doing the trading etc….. Our view is simple...who cares as all the above fits into one thing we’ve been painting here and that is the ‘UPSIDE RISK' was of creeping closer to 920-930 levels. This involves Bears covering, Bulls chasing the same scenario/levels no matter which of the above conspiracy theories you may include. Last Wednesday with the SPX below 910, we said a clear break should be underway in the vicinity of 915-920 and that it would be a little late (buying) at those 930’s breakout levels all eyes were on at the time. Judging by the ES futs chart we got exactly that from 910 to a high 927.75 in a few minutes. We have to admit it was quite hilarious and exceeded our best expectations of a move to May highs. So what now?. Well, yesterdays (Friday) is history and tomorrow is a mystery!…Well, it’s actually not a mystery to a start Monday thanks to tonights China PMI number. Expansionary threshold very much in tact with this reading!
In Friday`s Journal, we discussed the probability the market was in a holding pattern awaiting new and further signals from China. We hope the PMI is a start, it should at least give us a good open to flirt with 930 levels. If this PMI was not good, we might’ve seen a blow off top in Friday‘s close. More importantly, our inflation trade with commodity linked stocks since March looks to continue forward. Keep in mind when the market basically skips 20 points such as on the SPX, it will look for a reason to pullback and so keep a close eye on the US ISM survey num’ in the morning.
A jam packed week with eco’ data points, crude, $USD, TSY’s, all providing plenty of news flow at critical potential breakout levels!.