Once again, as yesterday, “In typical ‘resilient’ fashion, market came off overnight lows”.    Market was almost done erasing all the AMC tech sell-off when the PBOC ‘surprised’ with a rate hike and ES spiked back downwards.   Still, by early morning most of the momo- high beta’ rebounded and came an eyelash of closing their ‘gap-downs’ (eg.AAPL ~$314 as ‘bargains hunters go out in bid’ and fast trader shorts covered.   Unfortunately, short covering only lasts so long before longs only have to step up. The realization that earnings were not up to snuff and China just did make a rate hike that spiked the USD curtailed any conviction buying.   As far USD, this weekend‘s warning came to fruition, someone always knows something.."..with USD biggest day in weeks on Friday, this trade may rollover some in the next few days until this minor corrective USD/Euro phase ends".    Of course every commodity and the underlying stocks (materials, energy off >2%) took a beating as the DXY jumped 1.6%.

All in all, just to many moving pieces hit the tape and more came during the day, notably, the BAC /NY FED ‘repurchase’ headline caused a late day swoon.  This one was actually floating around overnight, but it gave sellers-shorts a chance to bunch all today’s moving pieces together in the afternoon for a selling spree.  There was no one group to rotate into today too keep the market steady as has been the case discussed last week.

As far as PBOC,  it’s really not bad at all and probably positive for their equity markets as it‘s a sign of official confidence and will not cause China to slow.(definitely good for their big banks).  It will be interesting to see how their markets react tonight and rest of week when their data/ inflation hits their market to get a clear read.  It would not be a surprise to see US markets act favourably, if Shang puts in a green day tonight.  

Yesterday‘ Journal, included MCP ’s nice action and today it had an exploding breakout on it’s biggest up volume day following a China Daily report of cutting exports.  This was actually denied by another gov’t official, but nobody cares to point that out when momo hits.  Any Chinese changes to quotas etc and this will reverse the trade, so this one is speculative at these valuations.   Only brought it up yesterday because it pull backed recently and came back up to breakout levels.   Another volatile one is MOTR  in the software tech/ based on cloud computing that should be watched now that it has pull backed to 9ema levels.  It will definitely move on new carrier contract news from emerging markets in the future.


In conclusion, today likely only a temporary pullback (much needed), if China hike becomes a positive.  Otherwise, it’s looking like August top on the charts.   This weekends G20 meetings are also going to become a headwind this week.    Unfortunately, earnings keep coming a little light and short of expectations tonight to give the market a lift, daily rotation will be tougher.