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MV Weather Report: Sunny Skies for Big Beta Names


Rain or shine, we review the day's biggest stock stories.

Last Thursday, the S&P 500 rallied past the important 950 level, to 955, closing at 944. That was 3 trading days ago; since then, the market's gone down 45 straight points.

On Friday, Minyanville Professor Jeff Cooper said that the move was a "fake-out breakout."

Today the market sold off on weaker-than-expected economic data on industrial production and capacity utilization. Morgan Stanley research analyst Jason Todd put out a note saying "the rally may be over for now." All of this has helped contribute to the pullback.

Big beta was the one bright spot of today's action. Stocks like Apple (AAPL), Google (GOOG), Research in Motion (RIMM) and Goldman Sachs (GS) were in the green. I find it interesting that these stocks started pulling back last week, a few days before the market did. They're higher now that the market is going down. Could that be a possible signal that the selling is going to end too soon?

Today on the Buzz and Banter, Professor Jeff Cooper talked about the potential for an ugly down day.

"What's disturbing: The consensus seems to have become inured to the idea of a really big shoe dropping.

"I think now that 920 has broken, there's a better-than-average likelihood that the afternoon will be uglier than expected.

"Why is 920 important? 920 SP is 90 degrees down from 950. 888/889 is the next increment of 90 degrees down or 180 down from 950. 888 is a full square or cycle of 360 degrees up from the 666 low and vibrates off June 15 to 18th.

"My gut is that we could get to 888-ish today/tomorrow."

For more context on the market's current position, here's a buzz from Professor James Kostohryz:

"Will the market find a new base at around the 900-910 level or will it go to 870-880?

"I believe that activity in foreign markets will be a major wild card factor in the next 3-4 sessions. Trading overseas can set the early tone in the mornings. They are also pretty good indicators of risk aversion, the movement of marginal money and the tenor of the "animal spirits." If Asian and European markets are able to bounce in the next few sessions, this will be extremely important for US markets. The converse is just as true. If foreign markets keep plunging, it is unlikely that the US market in its current technical state can buck the trend."

Other then the foreign markets (which I think are a great point), traders will be watching for CPI data at 8:30 a.m. Consensus estimates call for a rise of 0.1%.

Have a great night!
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