LET'S LOOK AT THE S&P 500 INDEX DAILY CHART

Last appearance on SQUAWK BOX was June 5th and I indicated in this circumstance we could look for a high from the resistance of the 90 day cycle and that high has occurred. There was a classic little distribution pattern showing a struggle upward for 6 trading days and now the decline. The decline has moved below the May high which weakens the uptrend. The decline has been 4 days and 1 to 4 days is the normal counter trend in a fast trend but due to the cycle and the distribution pattern it appears the decline should go to one of the calculated support levels at 883 or around 850.

The FTSE had a distribution pattern and the DAX and CAC40 showed 2 and 3 day counter trend rallies before the decline and also should go lower after a rally of a few days. It is possible we could see this pattern of trend develop into a 60 or 90 calendar day sideways pattern. I should have a forecast next time on the show.

NOW LET'S TAKE A LOOK AT THE NASDAQ 100

This is a little different picture as the move down has held the May high and there are three days of consolidation on top of that support level. And that level keeps the up trend in a strong position. Not what I wanted to see being short the S&P 500. But I still believe the odds favor a rally being only 1 to 3 days and turning down, even with this strong pattern due to the distribution and cycle.

The drop in continuing claims for unemployment, the first time in 21 weeks is getting some positive press. Keep in mind in the States unemployment benefits only last for 26 weeks so what is occurring is people are running out of employment benefits rather than finding jobs.

The problem for the stock indexes are interest rates. They are rising due to supply of treasuries not due to demand for funds from the economy and that is huge difference.

LET'S TAKE A QUICK LOOK AT THE TREND IN T-BONDS

You can see there is nothing so far to indicate this trend is complete. There is a cycle for low around the first of July but there is a possibility it could take a capitulation to set in a low and that would scare stocks. The next few days will tell that story.