Morning Call: Trading the 19th Euro Summit

The New York Times stunning announcement that JPMorgan’s (NYSE:JPM) trading loss from risky bets at their chief investment office in London could reach $9 billion is by far the most surprising negative headline this morning, but there are many other negative headlines to consider. The yield on Spain’s 10 year bond yield climbed above 7%, German unemployment climbed in June, and the markets are bracing for Italy to sell as much as $5.5 billion euros.

Today is the start of the 19th – yes 19th – European Summit! Germany is standing firm on Chancellor Angela Merkel’s pledge not to allow Euro bonds or fiscal integration, so expectations for the conference are low. I’m sure markets will be whipped around by headlines and rumors the next two days.

Futures are down about 6-8 handles after the market’s nice two day bounce of 1306-1309 SPX, or the 61.8% retracement level. If the markets are going to recover this morning, 1318-1322 is micro support that’s worth keeping an eye on to see if the market can hold up! If we drop below that level, the market will need to hold stronger support around 1306-1309. If the market is able to absorb the JPM news and we see some market friendly headlines out of the summit, we could move above 1333-1337 after which the next major resistance stands at 1340-1345.

It’s important to watch JPM and the rest of the banks this morning. Will the market isolate JPMorgan’s weakness and mute losses at the other banks? Also, look to see how accustomed the street has grown to the JPM news based on the market’s reaction. The stock just went from $31 all the way to $36.80 and closed strong, so there are probably some momentum traders trapped. It’s indicating a move towards $35.50, which is micro support. If it holds that area, the market is yawning at the news. Below that level, $34.45-$34.60 is next spot of support to watch. The major support level that propelled the stock to the second part of the oversold bounce stands right around $34.

Retail got hit yesterday.

The agricultural group just had a huge two day move, and the stocks could use a rest.

Some oil related names began a dead cat-type bounce, but can it evolve into the same type of spirited move that we saw in the aggs.

The metals remain trapped in intermediate downtrends.

High beta is mixed, but there has been no real momentum.

Look out for the impact of the Supreme Court ruling on health care stocks today.

Lots to consider.

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