Australia: -0.17% today.

Nikkei 225 (Japan): -2.64% today.

Europe is down slightly at mid-day:

FTSE 100 (UK): +0.5% at 11:30 AM.

DAX (Germany): +0.14% at 12:30 PM

CAC 40 (France): +0.05% at 12:30 PM

SPY pre market open: +0.0% at 105.15 at 7 AM EST

QQQQ pre market open: -0.5% at 7:00 AM

Probably a lower opening since the Nasdaq is down and leads the S&P.

Economic Indicators: Durable goods orders is announced at 8:29 AM EST. It is expected to show a 0.4% rise in August over July. July’s increase was 5.1% mostly from cash for clunkers. If you take out transportation, the durable goods increase is expected to rise 1%. So car sales are now a drag on durable good orders.

The Michigan Sentiment survey for September is expected to be unchanged at 70.5.

New home sales for August is announced at 9:59 AM. It is expected to show that 440K homes were sold compared to 433K the month before.

Earnings Announcements: KB Homes (KBH) a home builder, announces earnings before the market opens.

I was paralyzed, do I take the position off and take my loss, or will the market come back.

“Quick drops like that reverse. See, the stock is stabilizing”

A minute passes as the cursor hops up and down, the stock trading up a few cents, then down a few cents.

“I’ll feel stupid if I get out here and then it recovers”

The next leg down. It collapses another $1.

“I don’t want to know what that is doing to my account.”

My chest is tight and my stomach is churning. I’m holding my breath as if I can make it move up by watching it intently.

“I should have gotten out an hour ago. Noon is usually a quiet time. If I can last until then..”

“My mental stop was $10 ago. I should have sold yesterday when it wasn’t acting right.”

It moves down another $1. I can feel the blood leaving my face. I feel a little faint.

I thought of my kids. I was trying to safeguard their future and here I was watching it go down the drain.

I sell at the market to get out. It might move up or down, I don’t care.

I’m out, relieved, exhausted.

(This happened to me President’s Week 2000 with the NASDAQ when we were on a ski vacation in Quebec City. I have been vague about the details here to make it timeless.)

Australia: -1.65%

Nikkei 225 (Japan): -2.55%

Asia down quite a bit.

FTSE 100 (UK): +0.11% at 10 AM

DAX (Germany): +0.14% at 11 AM

CAC 40 (France): -0.11% at 11 AM

Europe flat from a down open.

S&P 500 (Globex): -0.7%

Nasdaq (Globex): -0.14%

Economic Indicators: Treasury budget for June at 2 PM EST. May deficit was $33.5 B, June is expected to be -77.5B.

CSX Corp (CSX), a railroad, Fastenal (FAST), maker of screws and other construction suppleis, and Novellus, a semiconductor manufacturer, announce earnings. So we get indications of the future from three directions today.

Europe is a stronger indicator of our open, so it might be flat to up at the open.

Australia: +0.02%

FTSE 100 (UK): -0.67% mid-day

DAX (Germany): -0.67% mid-day

CAC 40 (France): -0.79%

S&P 500 (Globex): -0.69%

Nasdaq (Globex): -0.46%

Economic Indicators:  Trade balance for May and export prices ex agricultural products for June and import prices ex oil for June at 8:29 AM EST

At 10 AM EST the preliminary Michigan consumer sentiment survey is announced.

Infoyss IIFY announces earnings today, it will shed light on outsourcing industry.

Doesn’t look like a good end of the week.

Australia: +2.12%  (Good for resources stocks today?)

FTSE 100 (UK): +0.69% mid-day

DAX (Germany): +1.21% mid-day

CAC 40 (France): +0.71%

S&P 500 (Globex): +0.66%

Nasdaq (Globex): +0.33%

Yesterday, the S&P 500 spent most  of the day negative, going as low as 870 before closing over 880.

Initial claims for unemployment insurance for last week is announced at 8:29 AM EST.  The consensus estimate is 603K new claims, last Thursday’s number was 614K.  Dropping initial claims signals the bottom of the recession.

Wholesale inventories for May is announced at 10 AM EST.  This doesn’t affect the market.

Alcoa Aluminum (AA) announced another quarterly loss last night, but better than expected, so shares rose in overnight trading.  AA is seen as the start of the earnings season which helps the market find its level.

Europe up to their lunch break is down too.  The FTSE 100 (UK)  is down 1.3%, the CAC 40 (France) is down 1.67%, and the DAX (Germany) is down nearly 2%.

The S&P 500 is down 9 points at 6:30AM, a little over 1%; and the Nasdaq is down 13 points.

The Institute of Supply Management (ISM)  reports on the service sector at 10 AM EST.  The numbers are trending upward, though still contracting.  The only piece of it that had reached neutral in May was deliveries at 50.   The consensus estimate is that the number will drift upward a little more to 46.

Europe is up one half of one perscent (UK) to 1.3%  (France).

The S&P is up 2 points at 6:30 AM and the Nasdaq is flat.

There are no economic numbers coming out today.

As you can see from the chart above, after today’s sharp drop, new 20-day lows across the NYSE, NASDAQ, and ASE are now outpacing new highs rather handily. On Monday, the new lows hit a level they haven’t seen since the March bottoming period. I notice that new 65-day highs and lows are now about even. This fits with the pattern of market weakness–and the trend shift–noted in the recent indicator review and update of the sectors. Seeing the market weakness setting up early in the morning, as noted in the intraday Twitter comments, and placing that weakness in the context of a trend shift was helpful in anticipating our break of last week’s lows. It’s a nice example of how placing short-term strength/weakness in the context of longer-term market activity is useful in anticipating moves to and through key price levels.
.

Last week’s indicator review concluded that “Friday’s price highs in the major indexes were not confirmed by fresh highs in the 65-day high/low measure, an indication that the rally may be in for a period of consolidation. As long as we stay above the May highs in the S&P 500 Index, however, one has to respect the sustained buying displayed by this market.” During the subsequent week, we did indeed see range trade and consolidation, followed by Monday’s weakness. That weakness took us below May’s highs, raising the possibility that much of the June strength was a head to May’s shoulder.

Even before Monday’s decline, we saw a drop in trend strength among the S&P 500 sectors, as well as poor relative performance from three key sectors. Although Friday closed at a bull market high, we saw non-confirmations from the number of stocks making fresh 65-day highs vs. lows (middle chart) as well as reduced upside momentum (top chart). While the advance-decline line for NYSE common stocks did register a fresh bull peak early in June, it did not for the S&P 600 small caps (bottom chart, much credit to Decision Point). This once again highlights the distribution occurring at the June highs.

So where do we go from here? On Monday we registered 391 new 20-day highs among NYSE, NASDAQ, and ASE stocks, against 768 new lows. As long as new lows exceed new highs, we have to look at this as a potential trend shift that could take us well into May’s trading range. The key is holding below those May trading highs: if June’s trade amounts to a false breakout, we should stay within May’s range and trap the June bulls. A move back into June’s prior range and above May’s highs would set up a fresh set of range bound conditions.

As always, I will be following the indicators each day before the market open so that readers can gauge market strength and weakness. Those indicators are posted via Twitter; subscription via RSS is free, or you can check out the five most recent tweets on the blog page.
.

The average price of the stocks traded on the OTC last month was $0.02 (the second-lowest price/share in history), and the number of shares per trade was 76,600.  The only time these gamblers traded more shares per trade was March 2006.