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MV Weather Report: Does Market Barometer Now Read Oversold?


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

The market had no idea what it wanted to do today: The S&P 500 traded in a narrow range between 888 and 898. The news of the day: May existing home sales came in worse than expected, at 4.77 million, compared to estimates of 4.82 million.

The biggest winners on the day were: Potash (POT), Research In Motion (RIMM), Goldman Sachs (GS), and Rio Tinto (RTP). The biggest losers: Apple (AAPL), Amazon (AMZN), and Boeing (BA). Boeing was down on news that the company had postponed the first test flight of the 787 Dreamliner, which weighed on the Dow Jones Industrial average all day.

As for the S&P 500, it closed at 895, practically unchanged from yesterday's close.

On today's Buzz and Banter, Professor Jeff Cooper had this to say:

"Yesterday, I showed the following Square of 9 chart, which showed 888 to be an pivotal level.

Click to enlarge

"The S&P is attempting to bounce off this 888 level. It should be important to watch the behavior here, since a meager bounce could mean that big players broke ranks and rang the cash register prior to quarter's end; the 90-day holding period from when the advance of the SP over its 50-day moving average in mid-March has passed -- selling by large institutions after a 90-day holding period implies more favorable tax treatment.

"888 is 720 degrees in price up from the 666 SP low and 180 degrees down from the 950 high.

"The 'wheel' also shows that the Summer Solstice, June 21 is near 888 at 886 precisely.

"Has the S&P traced out an A-B-C pullback prior to move back up into quarter end?

"Don't discount a marginal new low/test to 886 that fails to see downside follow through and turns back up through 888."

Professor Cooper makes a good point. Right now, we're likely seeing disruption because funds that bought into the rally early on can now begin to take profits and secure quarterly gains. Another reason: Many investors chased this move above 900, and were buying for a potential 950 breakout, which failed.

Tomorrow will be a busy day for traders as they await the results of the FOMC meeting and Durable Orders. Monsanto (MON) will also be out with earnings before the bell.

Have a great night!
No positions in stocks mentioned.

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