Stock #Market Recap 12/08/11 {Video}

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The continued macro new out of Europe is obviously still having a huge effect on this market. There will always be news and headlines, but the issue is how sensitive the market is to them. In the current market, well, you have your answer to that question. Trying to time this market is like bringing a knife to a gunfight.

I’ll have more after the bell on the recap.

If inflation is imminent, the metals and miners sure are in no rush to tell us.

Gold, silver, as well as the senior gold and silver miners are all lethargic here, vulnerable to further breakdowns. The laggard, disturbingly, continues to be the junior gold miners. It is problematic for me to see the juniors lag, as I have been profiling for several weeks now, because they are usually good gauges of risk appetite for the precious metals.

Today, the juniors are sporting an ominous chart, threatening a breakdown from the recent consolidation at the 20/50 day moving averages. You can see the daily moving averages all sloping down, and the presumption is more weakness.

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The Dollar bulls are proving to be the “never say die” kids. With a strong Dollar, over the past few years equities have had trouble sustaining a rally. Currently, the Dollar is showing strength against the Euro, and that strength is also being reflected in its ETF, the UUP. Note the ETF below is threatening to push off from that base on the 20 day moving average. There are few currencies that seem to be as hated as the Dollar is and has been, and yet here it is showing resilience. Equity bulls want to see that EUR/USD form a double-bottom down here, but so far there is no sense of urgency from bulls to buy the Euro.

Perhaps at some point stocks can move higher with the Dollar. For now, though, the Dollar strength looks to be playing at least one part of the pressure on equities today.

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I mentioned on my video recap last evening that the S&P 500 was in a 20-point range this week, coinciding with the 200 day moving average as resistance, and the 150 day moving average as support. We are currently probing the low end of the range in the mid-low 1240’s. The more you probe support, the more likely it is to eventually give way. So, the bulls are not going to want to see price hang out down here too much more.

As for an intraday look, the chart above shows that since this morning’s gap down on the SPY, we have seen lower highs and lower lows for a trend day, thus far. The bulls are looking to make a double-bottom here to set up an afternoon rally. That is a big “if,” though, so the bears have the short-term initiative until further notice.

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The selling is picking up this morning, with all sectors in the red. Energy, materials, and the recent standout financials are lagging, while select large-cap tech stocks like AAPL (I posted that I covered my short last week, but the island top has yet to be negated, and the MACD divergences are still true) and Google are holding up well. There are also a few notable names in the green like DPZ and MCD, both sporting impressive charts for this market.

The main issue right now is whether the macro news is so bad that we will fail to see your typical “Santa Claus Rally” this year. After the V-shaped rally last week, some selling was to be expected and even welcomed this week, in order to firm up charts and offer up better opportunities. However, there are no guarantees in the market, and just because we see some selling does not necessarily mean that a Santa rally is a foregone conclusion.

My primary focus is to not get married to any one bias. I see plenty of traders trying to force a specific thesis here, and I just do not think that now is the appropriate time in this market to do that. Quickly cutting losses and having an open mind have proven to be more useful weapons in 2011 than making bold calls.