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6/14/2012 1:00 PM
By Charles Payne, CEO & Principal Analyst
The market is poised for a massive oversold bounce but along with this notion comes high anxiety and the possibility of serious disappointment. The charts say it all. There has been a series of lower highs and lower lows as each rally attempt is nipped by softening economic data in the US or more shenanigans in Europe. I'd like to see the three major indices all close above key resistance levels before pulling the trigger. You have to wait for these resistance levels to be cleared on closing basis- don't jump in before because bias to the downside where next leg down would be painful.
I featured the Dow this morning, which is nearest the key breakout point than its other leading indexes. Remember the key is closing above 12,600. Keep in mind this weekend is huge. There is polling evidence that New Democracy is leading in the polls in Greece which means the bailout could workout with less acrimony than if the leftist and Communist win. In addition there are more and more signs that Germany is more amenable to some kind of deal that might include Euro Bonds. When it's all said and done there will be some kind of collaboration that involves money-printers, policy makers and strong-armed debtors.
S&P 500 next leg lower would be 1,275
NASDAQ next leg could land it at 2,700
I think we have to be long going into the weekend for a massive tradable bounce but wait until the close before taking any action mindful of technical parameters mentioned above.
Bad News is Old News
By David Urani
Aside from some positive murmurs of action in Europe and a seemingly growing probability that the Greek leftists lose the upcoming election, we were greeted with some poor economic data in the form in initial jobless claims that rose once again, to 386k from 380k. Let's face it, the employment market continues to remain soft after May, for which we got that weak BLS report.
But the funny thing is, the market actually had the nerve to rise by about 50 points immediately following the jobless claims data. Now we seem to be firmly in a position in which the market knows the economy is bad, and where each new poor piece of data raises the chances of Ben Bernanke coming to the rescue.
Of course, a tame CPI reading also came out at 8:30 along with the jobless claims, with a -0.3% headline decrease month to month; prices excluding food and energy were up 0.2%. Tame inflation means more room to work with for the Fed.
The other story the market is shrugging off today in hopes of euro and US government action is the ongoing spike in Spanish and Italian bond yields. Italy held a bond auction this morning in which borrowing costs shot up. Along with Italy's rising yields, Spain saw its yields rise above 6.9% which marks a new record high since its involvement in the euro-zone. Nevertheless, the Italian and Spanish markets are each up more than 1% today.
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