"Book 'em, Danno"..

It took the market all of 15 minutes to get to Heaven’s doorstep after spending the week in ‘1140’s purgatory’.   The doorstep was talked about this past weekend and last night…“..the market is coming up to a cluster of `R`  in the 1154-1162 range.   Is it worth to chase one of the best months in decades for an extra 10-15 SPX points at this point? . That's a question you should ask ahead of a focus change as we get into earnings season.    We've highlighted on a chart here off and on of the April-August DT line and August DT that once were busted...the market rallied.   Well, we have a big one coming up not discussed from what we've seen.   You have to look back to dreaded Oct `07 top down trendline lined up to this April DT top....lining up to 1062SPX now.    For some reason, mostly psychological, it seems like a pivotal place considering what the market has been through the last 36 months!.    These are some of things going through this traders mind in contemplating what to do.” .

Well, the market got the door slammed in it’s face at the 36 month DT trendline….

BTW,  we use fat crayons here for trendlines, so 1162,  it’s actually 1159 and was almost a bullseye hit before the ensuing aggressive sell off.    The alert at 10am …“very lame ES/SPY ramp job at open to mid 1150's, stocks were hardly up a 1-2%, might be top sign.”…came with the SPX at 1153 or so, but smelling of machines burning the tape as DJIM Shadowlist was full of 1%, maybe 2% gainers and a host of stocks in the red marginally.   In the meantime, market indicies were already up ~1%.   Without looking at a gazillion stocks/ sectors, a quick glance at our current list of 40 or so stocks and you knew something was a fowl.     A fall into the 1130’s by 11am ensued before some underlying bid was found as the day progressed.    A biscuit to takeaway from the ‘underlying bid’ is the majority of the stocks in our list didn’t get hit hard at all.     A quick glance and you can count on the fingers of your 2 hands of the ones which sustained losses over 2%.   No bad for a 160pt Dow intraday drop, so it was possible to exit unscathed,  if the selling was a little too aggressive to your liking in the morning.   Considering stocks didn’t enjoy the ramp to 1157,  the question,  if it was wise to chase stocks all week into the cluster of “R” for 10-15 pts was undeniably answered as the 10-15 and more points went ‘poof’ in a  blink of an eye.    So, it was and will be a “pivotal place" (Oct 07 -April’ 10 trendline.)     It’s potential break will be decided once October rolls in with earnings season as focus switches to the micro picture. 

Some of the reasons cited for the fast open included the Chi’ PMI, but the fast start came into it and sold off the better than expected number.   So, what was it?.   The only other fundamental headlines (Irish Bank recap’ /ECB refinance) from Europe discussed here, (but Europe wasn’t on fire after these rumors from yesterday came in better than feared, officially).  If it was ‘end of Q’ chasing,  you chase individual equities and not the ES/Futures..SPY.   All in all, looks like machines gave us a tiny flash crash in the other direction to smack the cluster of “R” to pullback the market/ 'book'em September profits' ahead of earnings season and therefore, nothing more than an interim top most likely.