Wednesday 15th June 2011 Recap

Following on from my last post yesterday, cumulative ticks finished at -90,000 after fluctuating for the first 2 hours. From then on it was a steady trend down as the selling got under way. Volume was extremely heavy after 11.30am which was pretty much the time when the markets tanked. As you would expect, all the internals were very weak with breadth at sub -2000 and -1600 for the NYSE and Nasdaq respectively. Up volume to down volume was 10:1 negative on both exchanges as well. Furthermore the price action from yesterday's session does not reflect one that is likely to bounce today as indicated by the fact that there was no sharp rebound and price finished near the lows of the session. The fact that price spent so much time near the lows only reflects that the market is fairly valued on an intra-day time frame.

On a technical level, most major markets are now at very important points of inflection. eg. the ES is at the 200 day moving average, the USD is close to breaking an important resistance point, the Euro is precariously at prior swing lows, gold is close to breaking it's longer term trend line. So whoever wins at these price levels will probably determine what lies ahead for the next weeks and possibly months. I'd say that it's most likely that the USD rallies higher from here, as well as bonds given that we've seen higher highs and higher lows on an intermediate term time frame. Given these are both risk averse assets, that would spell further weakness in equities.

On the trade front I had to shut down my short RUT put spreads after my conditional order was hit and took a decent loss. My VXX trade has now flipped to a small loss but I'm inclined to hold given how it's structured and depending upon what happens here with the inflection points. I also have on an June OEX Put BWB with strikes at 565/560/550 which is showing a nice little profit but am hoping that we get a little bit more follow through and ideally finish somewhere close to 560 by tomorrow (expiration day) which is where the March swing lows are. That would make for a nice weekend if that happened!