By Gareth Soloway on July 26th, 2010 11:49am Eastern Time
The SPDR S&P 500 ETF (NYSE:SPY) is trading higher on the back of June Home Sales which jumped 23.6% to a seasonally adjusted annual rate of 330,000, higher than the 316,000 expected by analysts. The market had been trading flat into this number but got a significant bid following its release. The SPY his higher by +0.99 (0.86%) to $111.40. Keep in mind, volume is extremely light and that has a tendency to keep the markets floating higher as well.
The key level to watch would be the 200 moving average on the SPY daily chart. This will act as a magnet for the markets and once hit, significant resistance. Note the chart below.
The strongest key leading stocks today are Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM). Both are surging to the upside on the continued positive news on commodity demand, especially out of China. In addition, the U.S. homes sales data is positive for commodities as well.
Small cap stocks continue to see substantial upside today. Chinese small caps that have been lagging the market are jumping. Many of these are trading at P/E ratios of three to six with high growth rates. It appears they are finally getting discovered. For more trades, including Chinese small caps picked up today, guidance, analysis and education, join the Research Center.
Gareth Soloway
Chief Market Strategist
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US NEW HOME SALES shot up 23.6% in June (highest rise since 1980) following a revised decline of 36.7% in June. The decline the supply of new homes to 7.6 months from 9.6 months is also helping to lift equities at the expense of JPY and USD. Extended gains in risk appetite boost EURUSD to $1.2955; eyeing resistance at $1.3030s. CADJPY tests 84.60 resistance, a break of which to call up 85.00s, Closely watch oils movements, breaching above 100 and 200 day MA to retest $80 per barrel. USDJPY remains capped at 87.70. since May 19. Both S&P500 and Dow further move up above their 200-day MAs. Prolionged gains extension in equities could exacerbae the monthly technicals in USD Index.
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By InTheMoneyStocks on July 25th, 2010 4:16pm Eastern Time
The S&P 500 Index surged higher this past week gaining 38.34 into Friday's close. The early July support level remains intact at this time, and the broad based index has closed above the important July 15th pivot high resistance point. As long as the index can stay above this current 1100.00 area it could see further upside. However, as we have seen from the past six trading sessions this index can be very volatile. Therefore, it would be prudent to prepare for surprises in both directions with large point swings. If July has proven one thing it is that it will be volatile and choppy. The S&P 500 index will have weekly chart resistance around the 1108 - 1110 area and much more around the 1121 - 1126 area. Should the index decline or happen to sell off the 1075 and 1060 levels should be important for weekly support. For an alternative means of trading the S&P 500 you can utilize the SPDR S&P 500 ETF (NYSE:SPY)
By Nicholas Santiago on July 26th, 2010 10:00am Eastern Time
The major market indexes all rallied last week into Friday's close. The SPDR Dow Jones Industrial Average closed just above the July 13th pivot high which was an important short term level resistance level. While many traders and investors are talking about the great earnings reports as being the driving force for the markets, most of our followers believe that it is the declining U.S. Dollar that inflates the major market indexes worldwide. This morning the U.S. Dollar Index is trading lower by 0.28 to $82.32. However, the major market indexes have seemed to stall out here at the open. Therefore, if the dollar begins to rally higher today it is possible that the major stock indexes will deflate.
FedEx Corp (NYSE:FDX) raised guidance today and this has certainly helped the stock indexes and the transportation index. The Ishares Dow Jones Transportation Index ETF (NYSE:IYT) is trading higher by 0.78 cents to $79.58. Last week United Parcel Service Inc (NYSE:UPS) released very positive earnings and guidance. Today the announcement by FedEx Corp confirmed that news, however, both stocks are now extended on the charts and look poised for a pullback. Therefore, it would not be surprising if this news has already been anticipated by the market and baked into the cake.
Monday's are usually the one of the lightest volume days of the trading week. Light volume will normally favor the upside. Hence the saying, never short a dull market. Therefore, it is possible that if the volume remains weak the market indexes could float higher. However, the U.S. Dollar must still be watched and followed closely as any bounce in the dollar may stall out these markets. The Dollar is the decision maker. We shall see.
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: YEN RALLIES across the board, unwinding some of last weeks losses; USDJPY fails to break 87.70 50% retracement of the 89.13-86.28 decline, now eyeing 86.80 prelim support; US June new home sales. CADJPY continues to turn the corner, eyeing 83.40s from the current 84.00s after having failed the 61.8% retracement at 84.60s. Thus, although USDCAD is showing a highly uncertain wedge; theres potential for a clearer retreat in CAD vs JPY. US June new home sales due later today. In the event of improved risk appetite, GBPUSD and is seen retesting $1.55; EURUSD at 1.3030s.
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care needed with the stock rally that is being talked aboutdollar index 0.35 by 3 hilo.daily data inputthere is a test of a major trendline,but no signal ie.double-bottom that is needed to show a proper break of trend.one more "O " is needed
By Nicholas Santiago on July 23rd, 2010 3:41pm Eastern Time
This afternoon the Committee of European Banking Supervisors released their bank stress test results. Seven out of the ninety one banks tested failed to meet the Tier 1 capital ratio required to pass. The failed banks were from Germany, Spain, and Greece.
Who really knows what this means. Didn't the European Central Bank (ECB) just bailout these same banks to the tune of $1 trillion? These European banks should not fail any kind of test in the near term. Look at the United States Toxic Asset Relief Program (TARP). TARP reflected a bailout to the tune of $700 billion, and the major banks are still not lending any money to borrowers. This comes as the Federal Reserve Bank’s (U.S. central bank) fed funds interest rate is still at zero percent since December 2008. Therefore, the large major banks in the United States can essentially borrow money for free. Today it appears that Europe Union has taken a page out of the United States play book. We shall see how long this small market increase will last. In my opinion if the global markets stall out with all this stimulus that is being pumped into the system there could be a much bigger problem brewing; deflation anyone?
Today the intra-day action was very choppy after the European announcement of the stress tests. Shortly around 1:00 pm EST the major market indexes all started to trade sharply higher. Commodity stocks began to take off again to the upside. Stocks such as Freeport McMoRan Copper & Gold Inc (NYSE:FCX), and United States Steel Corp (NYSE:X) have surged higher during this rally. However, while the financial stocks are trading modestly higher, they are not explosive. Goldman Sachs Group Inc (NYSE:GS) is trading higher today by 0.69 cents to $147.23. J.P. Morgan Chase & Co (NYSE:JPM) is also higher 0.52 cents to $38.87. Bank of America Corp (NYSE:BAC) is trading higher by just 0.09 cents to $13.75.
While the markets are celebrating today by trading higher there are still a lot of soft patches out there. The European stress test seems to be nothing more than another dog and pony show mimicking the Ben Bernanke and Tim Geithner two step dance. This jubilee rally won't last long.
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7 of the 91 banks failed the Eurozone Stress Tests, whose scenarios included: -0.3% in 2010 and 2011 GDP, a double-dip recession, 20% decline in stock markets in 2010-11 and a 4-notch credit ratings downgrade of Eurozone securitized products. LISTEN TO ASHRAF's INTERVIEW discussing the Stress Tests http://link.reuters.com/syb39m # Equity markets are little changed, while GBPUSD retains momentum to regain $1.5480s into early next week. EURUSD seen remaining supported at $1.2770 but with renewed chances to retest $1.2930.
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By Nicholas Santiago on July 23rd, 2010 10:01am Eastern Time
By all accounts the month of July has been very positive for the major stock market indexes. The SPDR Dow Jones Industrial Average (NYSE:DIA) is now higher by more than 7.0 percent from the early July low pivot. This is a sharp advance higher in less than a thirty day period for the markets. The big question that most traders and investors are now asking is, how much upside is left in the tank?
July is an earnings reporting period for most companies; thus far the results have been mixed. In the beginning of the month the street reacted poorly to most earnings releases despite the numbers or guidance reported. Alcoa (NYSE:AA), and Intel Corp (NASDAQ:INTC) both sold off after reporting better than expected earnings. Recently the street has been reacting better to earnings and economic news. Even companies such as International Business Machines (NYSE:IBM) has bounced back after initially getting pummeled after reporting earnings. You can almost feel the mood of the market changing its mind on a daily basis. It is important to note that the Dow Jones Industrial Average has staged four major reversal days since July 16th. This is a very rare event and shows the amount of uncertainty that is still in the marketplace.
The driving force in this market is not earnings or the economic news. Nor is it the Federal Reserve Bank talking of the next remedy they have in the medicine chest. It will not be the European bank's stress tests; it will not be any of these so called major events. It will be and has been one thing since 2008; it is the movement and action in the U.S. Dollar. When the dollar declines the markets inflate. When the dollar rallies the stocks markets around the world deflate. Personally, I believe it is that simple. Sometimes the stock markets will trade inverse to the dollar on a tick for tick basis. Other times the market will react inversely to the dollar on a daily basis. The end result is that the U.S. Dollar Index has dropped around 7.0 percent since the June high. It is rather ironic that the stock market is higher by 7.0 percent since the early July lows. It is all about the U.S. Dollar Index. The bottom line is when the dollar falls the stock market inflates.
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CAD ATTEMPTS RESILIENCY in the face of softer than expected Canadian June annual CPI at 1.0% from Mays 1.4%, with annual core slipping to 1.7% from 1.8%. Not enough risk aversion is occurring for USDCAD to break above the Jul 20 trend line resistance of 1.0450 just as yesterdays 1 June trend lien support of 1.3440s held. OILs POWERFUL breach of the 100 and 200day MAs in a single day to $79 continues to support loonie. USDCAD daily chart is INCREASINGLY SYMMETRICAL, suggesting that risks of an upside/ downside breakout are balanced. 1.0355-60 remains strongly underpinned for now, attracting buyers as US equity indices approach their 200-day MAs. AUDUSD nearing its 200-day MA at 0.8970s, which is also 3-mth TL resistance. Beware of outstretched gains in the midst of remaining concerns from global central banks. More frequent coverage on stress tests is found on twitter at http://twitter.com/alaidiRead more…
