Merkel to the rescue

I guess that was Merkel's version of the PPT.

This was obviously big news overnight and has out markets rallying hard on the heels of a strong rally across Europe. The leading index of Europe - The DAX - opened on its 200day moving average of 6280 and is now also over its 50day moving average at 6390. This are 2 very positives that should lead to an extension in the near term. Watch your shorts...and I dont mean the swimming kind for the upcoming 4th of July holiday!

S&P futures...be on your guard

The S&P is breaking short term support here as the bearish flag gives way. First level of support below 1318 exists around 1310 with stronger support near the June 8th and 12th lows around 1303-1305. Banks look particularly weak today...sell the rallies.

DAX - Merkel better send in the PPT - Macht Schnell!

With the oscillator below entering the danger zone and just about ready to turn down, Ms Merkel better think about sending in the Plunge Protection Team to prevent the DAX from testing 6000 and eventually collapsing towards 5500 or lower. Yes folks, things are deteriorating in Europe rather quickly if you haven't noticed.

As I have said in the past, without the DAX and without China's Shanghai Composite, our own broad market S&P will NOT be able to have a sustainable rally. This chart, and especially the oscillator, looks eerily similar to some of our own stocks and ETF's.

Remember the trend is your friend, and right now its down, so play it that way.

AAPL's curves don't look so great in this picture....

Any apple I have ever eaten has been nicely curved in the right places and most have been juicy to the core. But unlike the your favorite apples to eat, the curves in this AAPL aren't so appetizing.

In addition to all the technical jargon I have been using here on this blog there is one that I don't think I have mentioned yet...the rounding bottom and rounding top formations. Below is a good example of what appears to be shaping up as a rounding top. Although AAPL is making higher highs, it is doing so with less vehemence each time and is now most of the way through what is developing into a bad technical posture.

Add to the weakening backdrop a falling 50day moving average that is close to crossing below the 100day moving average and you have what may well be a technical signal developing in AAPL that can possibly take the stock down to its May lows if not all the way down to the $500 area.

For all you AAPL lovers out there (personally I love their products, own a few of them, and have benefited from the explosive stock price - so I'm a lover, not a hater) I am not trying to bash the stock just for the sake of it. This is an unbiased opinion about the what the chart is saying to me. Essentially it is a picture that displays the emotions, thoughts, and expectations of investors and traders. Others may see it differently, but the only thing that will change my mind about MUCH lower prices for this stock is if it makes a higher high over its June highs. If that doesn't happen soon, and AAPL breaks below its 100day moving average, this apple is going to fall from the tree.

S&P futures - trendline selling well publicized

I have spoken about fractal patterns in the past and today was another good example of just that - although today was a trendline example instead of pattern. On the intraday futures chart (actually going back to late Friday) there was a trendline connecting highs that was used by sellers today.

For short term traders, the first time you can draw a treneline between any 2 peaks or troughs you should - it may not ALWAYS work in your favor but it gives you the first indication of where support/resistance may appear. In this example, after the first peak in the overnight session if you drew an extended line you would have been able to know where the sellers could appear. First resistance was between 8am and the opening, then late in the day sellers showed up again near the trendline right near the close .

Just another tool in your belt when trying to beat Mr Market.

Look out below...S&P setting up for fall.

Remember that overbought condition I mentioned in the broad market...how an important oscillator was extended and due for a pullback...well here it is finally crossing down from a high level. With the longer term momentum still falling in the weekly chart and the short term now turning down, it appears the broad market is heading for lower prices. The area of the 200day moving average should be the first battle ground (call it 1295-1305) but it is likely to be just a pause towards lower prices. Ultimately this leg down should settle somewhere in the low 1200's.

Keep a close eye on the momentum indicators and continue to play from the sell side.

Russell Rebalance

Today is a Russell rebalance day so the close should make for some interesting action on heavy volume. Watch the heavy short interest names especially.

Enjoy the weekend!