Since Monday morning's surge, on China loosening yuan's peg to the US dollar, the market had been on the defensive. This morning's home sales data, which fell unexpectedly, further gave the market reasons to take some profits off the table. After all, the market has been rallying up 2 weeks straight without taking much of a break.
Yesterday, we did some quick trades on V and MA, which got a quick pop, as a compromise was reached on debit card fees. Just after the news was released, I mentioned in the Trading Room:
June 21, 2010 10:01 AM
MA/V
jumping!
June 21, 2010 10:29 AM
MA/V [calls]
might see daily doubles!
June 21, 2010 10:46 AM
MA
220 calls up over +50% in a hurry from $7 (now $11!)
June 21, 2010 11:00 AM
MA
220 calls also doubled...
June 21, 2010 11:01 AM
V
out for now; daily double! +104% (in 30 minutes!)
Both the MA July 220 calls and V July 80 calls doubled in about 30 minutes! We also took some profits on our RIG July 50 calls in the morning:
June 21, 2010
08:34 | HappyTrading RIG ($54.50) Sold to Close 07C50 Jun 50 calls, at $6.50 +49%
Today, the market was trying hang on in the morning, but, gave in to the selling pressure in the afternoon. The selling excelerated into the close. Energy stocks were very weak: APA -2.32%, UNP -3.9%, EOG -3.76%. Some of the recent high-flyers that really has not come down at all finally saw some profit-taking. NFLX fell from above $127 to $116.43 in 2 days. CMG dropped $6.44, or 4.25%, today. DECK, which almost touched $170 on Monday morning, closed at $156.97 today.
The Dow was down 148.89 points; SPX fell 17.89 points; Nasdaq dropped 27.29 points:
XME (metals and mining) lost 3.34% and XLE (energy) was down 2.92%. OIH (oil services) fell 3.66%. XLF (financials) dropped 1.59%. GLD (gold) and SLV (silver) bounced a bit from Monday's weakness. FXI (Chinese ADRs) gave back some recent gains.
SPX
SPX fell 17.89 points to close at 1095.31, below the 1100 level. It closed below its 30-day MA. The MACD flattened.
Nasdaq
Nasdaq lost 27.29 points to close at 2261.80, below 2300. It also closed below its 30-day MA.
Since last Thursday, I was looking for SPX to test 1100:
June 17, 2010 12:29 PM
SPX
should test 1100
and, had been a little perplexed when the market insisted on holding up. Monday's news on Chinese yuan helped explained the market's sustained strength. But, immediately after the morning pop, sellers came in, and, continued today. Today, SPX closed just below that 1100 level. Both the SPX and Nasdaq are testing their respective 10-day MAs. VIX got a big pop to close just above 27, as I said in the Trading Room this morning:
June 22, 2010 7:20 AM
VIX
might test 26 to 27...
So, now the market is back to a "neutral gear", just before the Fed's rates announcement tomorrow. This market is still range-bound. The 2-day quick fall certainly brings caution back onto the market. Tomorrow could see a choppy morning, and, we'll wait to see what the Fed says.
Good night and HappyTrading! ™ 
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