1:00pm (EST)
The bulls have put on an impressive rally this morning as all three of the major indexes are posting solid gains. There was a batch of generally good news over the long 3-day weekend, and the market has benefitted from the buying spree.
We mentioned in our Weekly Wrap that we could see some type of rally out of that gate, and it appears we have our “snap-back” rally, dead cat bounce, etc. But how serious is it?
The Dow is currently up 66 points and is at 9,752 while the S&P 500 is at 1,029 – up 7 points. The Nasdaq is advancing by 12 points to 2,103. When we started this report a little after Noon, the Dow had been up 120+ points…
The rally is impressive, but the bulls are running into resistance. Last week, the Dow broke another wave of support at 9,800; the Nasdaq took out 2,240 (200-day MA) then 2,150; the S&P 500 sunk below 1,040-1,050. Look at where we are at.
We aren’t too convinced the rally will hold (and it is fading as we type) because we were watching the futures market over the weekend and all day yesterday and into this morning. At one point, the Dow futures were down nearly 70 points while the S&P futures were taking out new lows down near 1,000. That all changed as the overseas markets started to trade and showed some gains. Futures improved heading into the opening bell this morning.
At 10am, the ISM numbers came out, and they were weaker-than-expected. The Institute for Supply Management reported its index of services companies fell to 53.8 from 55.4 in May. Although the results still signal growth, Wall Street had penciled in 55.0 for June.
There was a little move lower before the market resumed its uptrend, but we are off the highs as we head to press.
We talked about the upcoming earnings season, and the bar is not that high for companies to match or beat expectations. The key will be what their outlooks offer going forward.
Another catalyst will be the upcoming results of Europe’s bank stress tests. The euro has been rising as word is that the financial firms are in “good shape”. The U.S. is still dealing with its own financial reform so it remains to be seen how this all plays out. Some say the euro will power its way back to $1.35-$1.40 while others say a fall to $1.00-$1.05 is in the cards.
The closing bell will be interesting because we have seen early morning rallies turn into late day fades. With the indexes bumping into resistance, we think there is a lid at these levels for today, and we are still expecting another leg down. The bears aren’t done, yet.
We have a lot to cover in our Members Area, so let’s get to it. We will be back in the morning with a full update on some of the story stocks from today.
]]>