A gap down and early swoon into support on earnings malaise was followed by narrow range chop into midday. Shortly after lunch, a report on CNBC from BlackRock said that the $30 billion Bear Stearns mortgage portfolio is generating better cash flows than the market price implies. A quick, steep rally followed, but it was short lived, carving out a H&S top which sold off in the last hour.Tomorrow should be interesting as we sit on support, following another relatively narrow range, low volume session. From the 15 min. chart see a wedge taking shape with positive divergence of the RSI and MACD to lower prices.
The USD broke out of its bullish pennant and looks poised to challenge resistance. Gold and energy are still consolidating in a narrow range.
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