SUMMARY:
- Banking too much on Europe? Sharp reversal below the August trendlines.
- Durable Goods Orders in August weak as expected, but business investment rebounds.
- Insurance premiums rise 9% this year as Obama’s nationalized healthcare model shows its impact.
- Going to the Supreme Court: Obama looking for the Court to throw out the healthcare bill for him?
- AMD warns after hours. Another chip company with troubles, and that won’t help the stock market.

Another late selloff truncates this bounce attempt. 

Tuesday a late selloff lopped off large chunks of the stock market rally. Wednesday stocks started higher and rallied upside despite a weak Durable Goods report, but met the sellers again, this time ahead of lunch. The upside managed a credible showing, holding the indices around the flat line. Looked as if it could be a rather even keeled consolidation session, one the latest bounce attempt could use to rest, recover, and then continue the move.

Once again, however, the last hour was the rub. Sellers appeared once more, but this time there was no huge cushion to absorb the downside. NASDAQ gave back 31 points from the late afternoon peak to the close. SP500 gave up 17 points in that last hour selloff. The result: 2%+ losses for most indices.

NASDAQ -55.25, -2.17%. SP500 -24.32, -2.07%; DJ30 -179.79, -1.61%. SP600 -3.9%. SOX -2.91%.

The move pushed NASDAQ and SP500 below their short August uptrends. DJ30 is holding on but is back at the middle of its August to September range. SP600 is testing its closing lows. SOX is still decent, but it looks to be putting in a lower high, falling through the August interim twin peaks. With AMD joining the other chips warning about the quarter, SOX may find some tough sledding Thursday. In short, not the greatest upside action for the market on this bounce attempt.

THURSDAY

Lower highs on all of the indices inside the trading range. As noted above, lower highs in trading ranges are not great for the upside just as higher lows in the trading ranges are not great for the downside. There are still leaders in retail, tech, medical/healthcare, but even those took a body blow today and have to prove they can hold the line and continue the moves. With AMD warning after hours some of the tech may not hold the line.

Still plenty of news left in the week with jobless claims, GDP, and Pending Home sales Thursday, Personal income and spending, Chicago PMI, and more Michigan Sentiment Friday. Of course the big news is Europe, and on Wednesday and even Tuesday afternoon the excitement over a US-style bank plan was waning.

Enough that the indices made a lower high in the ranges and that threatens a break below the August lows. That is the threat; the dial ticked back toward negative in the trading range. Ah the trading range. Even with that lower high the indices are still in their ranges and while the action is more bearish and SP600 is already at the bottom of the range, we play the range and watch for a bounce at the bottom. BUT, given the action, be ready for a breakdown just in case. Europe and a deal there remains the wildcard that rallies the market. The market tried to anticipate a deal but was premature. If a deal comes the indices are in position to move higher for sure. Thing is, government and government intervention is a hard thing to trade and invest around.

Thus you have to stick with the technical picture and act accordingly. The noteworthy aspect: despite excitement over a possible European plan, the market did not come near breaking out of its range.