The market got off to a choppy start for the week but finished the session slightly higher for its third-straight Monday. Although the gains were minor and volume at its lowest level of the year for a full session, it gave the S&P 500 an 8-straight winning streak heading into Tuesday’s action. With Ben Bernanke speaking on Wednesday, we expected another tight trading range with until he spoke and with IBM (IBM, $193.54, down $4.45) reporting earnings after the close, it was the perfect storm for a test to new highs on Thursday or a possible double top on the Dow and S&P.
Needless to say, Big Blue came through and Bernanke said all the right things to push the indexes to fresh all-time peaks ahead of Friday options expiration day. Google (GOOG, $896.60, down $14.087) and Microsoft (MSFT, $31.40, down $4.04) surprised the market after the close with big earnings misses setting up a possible pullback on Friday but futures were up ahead of the European market.
We mentioned last week that July options expiration has been bearish in recent years and the open on Friday was weak. However, we mentioned in our midday report the market could end mixed as the bulls were regaining their momentum and by the close the S&P 500 and Russell 2000 were in the green. The Dow ended slightly lower and the Nasdaq held our downside target setting up what could be a continued bull run higher through the end of the month. (read more…)