Morning Thoughts May 23

  • SPX basically unch, but could not hold early gains. Headline from Papdemos that ‘preparations for Greece Euro exit considered’ clearly did not help. Volms -6% v 5d avg.
  • Risk for sale with RTY -66bp, SOX -77bp,  Cycl/Def -16bp. Fncls closed off highs, but held onto most gains with S5FINL +70bp (best supersector) & BKX +113bp (2nd best subsector); JPM +5% (2nds best SPXer), C +3%, BAC +2%.
  • Housing best subsector after better Existing Home Sales
  • After Monday’s strong rally yesterday was essentially a consolidation day with a doji on the daily chart.  No major damage yet to Monday’s outside day bar but with futures off 10 points we are getting close to having to be very careful.
  • As communicated yesterday I took 1/3 profits in my long position in SPY and raised the stop on the rest to 1312 (SPX) on a closing basis.  As we closed above there I remain long 2/3 of my SPY position and retain my 1312 closing basis stop.
  • Should the SPX fall below 1305 and look to stay below there I will initiate a short position in SPY

  • The dollar index keeps rallying and made it above the 82 mark at one point earlier today.  My upside target there should we get above 82 remains 84/85…and that wont be bullish for stocks in the intermediate term

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