Normally, on a day where the market rises 3 whole pts, there's really not much to talk about other than a big yawn. However, today's a particularly interesting day for both the Bulls and Bears. Well, lets start with the Bear camp. The Bear argument here is that we have stalled at SPX 1030, based on this weeks reaction to good eco' reports, a sizable pullback was imminent. They got their wish, at least for about an hour or so it was sizable in comparison as the market dipped as low 1015 ( between the 1013-1018 on our chart as support), which is also 200 mth MA important support level. As we said beginning of week…” use exaggerated weakness to pick up those most affected from our core“. Once again, the shorts couldn’t aggressively and/ or simply didn’t want to press positions. We’re left with another brief and still shallow correction. Again, ”all talk, no action” , by all the recent naysayer’s!
From the Bull camp, the only thing they have to say today about market after it touched 1015 .. "the rest is history" as the underlying bid prevailed once again! As bulls, we welcome these kind of dips, especially on low attendance days and when it's not a news catalyst related event. You never sell a dull day/ week. In the current rally environment, you never sell, period! Ok, perhaps this is too extreme of a statement, but we are pointing out the fact rather than theory. Same thing happened when the market was meeting with stiff resistance at SPX 955 and 1k. While each scenario was different, market was able to overcome with some shaky pullbacks and broke to new highs at the end. By the way, we aren't talking about distant history here as those levels were taken out just within the last two months.
On the earning side, we again have some very firm reports from the likes of DELL, MRVL, OVTI (alerted AMC) and ARUN. This is important because these are JULY-end reports and it bodes well for those who reported at the start of earnings season as July business was not included. These simply show things are even better for those June end reporting companies. Tech should finally help Financials and lower dollar should help commodity linked stocks tomorrow, especially. Likely, a trifecta building to melt up over this recent rally cycle high of 1037.
Are we simply waiting for the end of summer trading before the rush of crowd to push this market even higher?. Perhaps. What's happening out there isn't the result of a temporary bounce or squeeze, we do have folks putting money at work here. With the recent change in economic outlook and pickup in production/activity, it's hard to imagine everything would turn around 180 degrees and we head for a double dip recession. It in theory can happen, but at this point, we'd imagine Vegas bookies aren't taking the bets.
As far as the broad market picture today, we simply had an impressive rally off the low. What's interesting is that after spending much of the day in negative territory, both techs and commodity group staged a strong come back joining the Financials (led again) who are keeping the market stable. Late action has a lot to do with the slide in USD, which of course is good for equities and as we push up early tomorrow, the profit taking on moves up this week may turn to buying looking forward to 1044 as buyers stop taking a breather. Notable plays off our list, paper stocks RKT SWM made another new high. PRE, as well. Techs such as STEC ATHR also inched up as well.
Bottom line, what's not to like about this market? Nothing!. Have a nice weekend!