Naz Dumps the Market

The GDP report was pretty much in-line with expectations, which is not enough to offset the huge drop in the Naz futures pre-market. See yesterday's Market Wrap for an update on why Tech is down big in pre-market trading. It's looking more and more like the Naz will have it's third nasty bullish bounce headfake in June. We have seen two Bearish Kicking Patterns already. In other words, the Morning Star Reversal, or confirmed bounce on the Naz yesterday is probably going to get blown up this morning. The Naz is probably headed back to 2,350, and maybe lower. Watch for selling in many areas across the Dow and SPX as well. It may be that the market indexes will drop right back down to recent short-term support areas. Be aware of those areas if you decide to trade puts.

I will be looking to exit my FCX and CF calls. I would normally look to trade some puts on the Q's and on some other stocks this morning, but I am leaving for the day right now, so I'm not doing anything myself. I'll be back later in the afternoon to do a market wrap. You can comment to one another through this post if you like.

I sold the FCX calls at breakeven early in the day. I still have a small call position on CF.

9:30 pm MT: Market Wrap: The Naz did indeed finish with its third Bearish Kicking Pattern of the month. The overall market sold off extremely hard, and the Dow finished at new lows for the year. Today played out pretty much how I thought it might, which is why I put out the Red Alert last night and this morning. If you played puts today and locked some or most of the position down before the end of the day, that's exactly what I would have done if I was trading. Now, based on the amount of selling today, I'm looking for a Thump and Bump tomorrow. By that I mean that the market will probably thump down, maybe even gap down a little out of the gate, and then Fast Money may start covering shorts ahead of the weekend, which would give the market a little bump mid-day or later in the day. So I would be selling the rest of my puts into any early weakness tomorrow.

The next support zone for the Naz is 2,300 - 2,310. The next support zone for the SPX is 1,270 - 1,277, with 1,275 being a round number that will probably be on a lot of traders minds. The next key support zone for the Dow is still a long way down at 11,000, although traders often turn the Dow on the 250's as well, so 11,250 could be the area if the Naz and SPX hold the zones I mentioned above. Interestingly enough, the Dow's most significant long-term support level is 10,750, which is the 50% retracement of the Bull Market.

PALM missed earnings and dropped over 4% after hours. The company isn't significant technically, but it could facilitate the Thump out of the gate. Also, before the open tomorrow, if Personal Income and Spending, and Core PCE (an inflation indicator) come out slightly negative or worse, then the Thump would be very likely.

If we get a Thump, I will be looking for the Bump by mid-day or so as the shorts start locking ahead of the weekend. As always, I don't know if we will get a Thump and Bump, but it does time out well considering tomorrow is Friday and shorts are sometimes pretty twitchy ahead of the weekend. And if price action on the markets does play out that way, then I would expect 2,305 - 2,310 to hold on the Naz, 1,275 to hold on the SPX, and 11,250 - 11,300 to hold on the Dow. As always, we shall see.....

Don: I wanted to give you a heads up on ICE. That's bad data coming off of Prophet. The first giveaway is that the after-hours are showing the stock up 7.21, which is exactly what it was down today. The second giveaway is that there is no after-hours news on ICE. The third giveaway is that none of the other exchanges (NYX, NDAQ, etc.) are up significantly after-hours. And the fourth and final giveaway is that I checked with some other chart feeds that I get and nobody else has them up after-hours. So you probably still have a great put trade going with ICE. However, if we get a Thump right out of the gate, you know what to do, right? I don't have to say it.....

As for me, I will be checking in and out during the day tomorrow, so I will post as I can, but I need to attend to some very important family things throughout the day. I will try and keep my nose in the market from time to time, but I won't be super involved. I will be doing the VC tomorrow as usual.