Ahead of the open, (05-06)

 Market drove through another round of support at SP 1275-1270 to a low of 1266 mid-day, but what was getting all the attention was the afternoon rally back to even on the day that garnered all the hoopla!.  Question here is what is so great about a 10 handle snapback?.  Despite a quiet and decent European session to boost U.S markets, U.S selling still continued in the morning.  All that happened in the afternoon was the selling petered out for time being and a little squeeze ensued after a big slide on Friday.  In this view, that’s typical due to oversold conditions with all seemingly trying to find a bottom today off the SPY for a near term big squeeze.  Frankly with no market driver (policy intervention) any squeeze (20-30 handles from 1266) will be short lived, so why not wait to step up and buy if you’re investor. (The macro clouds gathering last week didn’t go away over the weekend).  If you’re a fast trader an oppy’ might arise in the next few days with many meetings and/or events (G7 emergency call Tuesday, ECB Wednesday, Bernanke speak June 7) going on, but at the end, we will be back to square one as nothing substantial will occur and more disappointment will likely ensue as these turn out to be non -events.  Don’t see leaders spilling the beans with hints on possible market interventions, just to please the markets at this stage.  This is likely many market participants wish ‘play’ now, a squeeze from oversold conditions off intervention speculation.  In all, actions are louder than words (global publications headlines) is the preferred trade here.

 

Also, market has no eco’ data/ corporate events on the calendar this week worthy of being a driver.

 

As noted yesterday on the topic of market going lower, today’s SP 1266 low is not low enough. Some sort of capitulation is need as this market besides its 10% correction hasn’t seen much panic (maybe a little last Friday).  First realistic step is to SP 1250 without intervention occurring.