You can literally take our note following May’s CCI #,  just turn it upside down to discuss today’s market place.  Have a read through first of what we said back in May.

http://www.djimstocks.com/djim-journal-09/2009/5/27/taken-with-a-grain-of-salt.html

As you recall this green shoot was the mother of all green shoots!.   The surprising May CCI # , a number most traders do not include in their top 10 monthly eco’ data points to monitor.   We did move this data point up the ladder to watch in June,  but we still go by…"taken with a grain of salt”, in respect to its importance,  as it’s all of ‘5000 households’ across U.S.     Despite, what we think of this gauge,  we have to think logically on how the market may initially react and that’s why it only took a minute to alert after its release.   One tier1 broker had the estimate at 57, above the consensus.   This told us a low # would cause the wind to be let out of the May bubble# (common sense) as the mkt will use any excuse to move at this juncture.    We came into the day thinking an interim term top (as in this week) could be mid 930’s,  it probably turned out to be 930 today on this data.    Interestingly,   we said last month..  “Nonetheless, we closed at SPX 910 and we are 19 pts away from the short term top. So get ready to lighten up on some positions, folks”.    Well,  we topped out exactly at that same level today as traders unloaded positions taking SP from 930 to 913 quickly.     Considering our views last month, including lightening up positions,  indicated we didn’t take the number very seriously in May and so why should we change our tune this time around.    This is why alerted later in the day for a possible reversal  ~920+ as we have more important data points to move this market coming up shortly.   A probable good China PMI and we should erase all of todays losses in premkt (more on PMI linked stocks below).  Simply, we dropped ~17 pts from initial alert and climbed out of the gutter for about 7 pts after the last post.    Those trading SPY’s were gifted today with some easy volatility points.   As far as a technical wrap,  we think this it for the recent leg up,  we pointed out ~40 points exceeds probability of any more upside on no new worthy catalysts during the move.    We/You have to admit it would be surprising to get a fabulous data point to close off the week.    Therefore,  we have to think some downside potential from here.     Entering the week,  we noted our strategy is to wait on earnings and get your powder in order.     To be completely honest,  we’d welcome a correction part 2.    What we mean is the June correction is probably still in play and sooner than later, we could be testing the ' Golden cross' and then the 888-880 area.    We would love to have this occur or even breakdown lower before earnings kick off, while we sit on cash.   It would make risk reward better for upcoming EPS reports.   A test wouldn’t take long as in days to achieve,  so it is a possibility we are open to.     Look,  we’ve been saying for years, you make your best money in spurts a few times a year,  you don’t need to be invested 24/7.   Just stay selective now and burn a few points here and there off a play or 2 until earnings.    Enjoy some summer!

A few bullet points..

China PMI is overnight and as we said yesterday it is probably a good number once again.  One thing we did notice is traders were not lining up to buy the commodity linked stocks that go hand in hand with the number at the close.   Looks like market might baking this # in on individual linked stocks as traders were not positioning for a premkt gap to sell into.  We were thinking this play into close, but the mkt decided for us.  This is a change in trader tactics, we'll see if this holds premkt.   Next,  we’ll have to look to ISM after the bell, if this China number doesn't muster a positive response.   If a good number in US, follows a good number in China and we get no real positive action as in breaking 930-935,  it will put all the weight of hope on the Thursday's NFP.   Also, US SAAR auto number out tomorrow to monitor for a reaction trade if all else fails.

Sectors,

Friday afternoon, we alerted we were cashing in on PWRD, DDRX.   This week we were beating our heads for doing so as DDRX climbed 4pts this week, consolation prize is PWRD imploded 5-6 pts as regulation news hit all China gaming stocks come Monday morning..CYOU, NTES SNDA.   End result is it never hurts to book profits.     Everything else, financials, oil linked, tech is basically following the SP daily tape.. Ho-hum.