Maybe the S&P Can Break 960

[Excerpted from Bill Cara's Daily Report]

A very positive session on Thursday left traders left traders thinking that, just maybe, the S&P index could finally lift above the 960 area. If only the Boeing 787 were able to test fly, this market might soar on its wings.

At the close, the S&P 500 (920.26 +19.32 +2.14%) returned to the mid-range of a recent 880-960 trading range, while the NASDAQ (1,829.54 +37.20 +2.08%) and the DJIA (8,472.40 +172.54 +2.08%) also closed firmly, and traders are asking if the DJIA can recover the important 8600 level.

The Toronto Composite (10,355.85 +254.92 +2.52%) and the Toronto Venture Board (1,103.05 +12.39 +1.14%) had another move higher, completing a string of three impressive sessions.

Earlier in the day Friday, Austral-Asian markets were strong again to close the week with three wins. Japan’s Nikkei 225 (9,877.4 +0.83%), Hong Kong (18,600.3 +1.78%), Shanghai (2,928.2 +0.11%), Aussie All Ordinaries (3,899.5 +1.25%), and India’s BSE 30 (14,764.9 +2.92%) were all winners, apparently happy that the Great Reflation Trade is still on.

At this point in the session on European equity bourses, prices are flat to modestly higher. The French CAC (3,161.8 6:11AM ET -0.04%), German DAX (4,824.1 5:56AM ET +0.49%) and UK FTSE 100 (4,272.2 5:56AM ET +0.46%) were tentatively watching the lower US futures that sold off after Australian airline Qantas canceled orders for 15 Boeing Dreamliners and postponed another 15.

In US trading Thursday, all sectors and industries were higher. The economic news is somewhat more encouraging. Of many excellent performing sectors, the best were Consumer Discretionary and Industrials (XLY+3.5% XLI+3.1%). Technology, which had been Wednesday’s biggest winner, was Thursday’s laggard, but still managed a solid gain (XLK+1.5%).

The leading industry group was, once again, the Goldminers ($XAU+4.1%). On the losing side were, well there were none.

There were only 9 of the Cara 100s that lost money on the day, and these were led by First Solar (FSLR -6.8%). For the winners, the best were Bed, Bath & Beyong and Brunswick Corp (BBBY+9.5% and BC+9%).

The $USD closed flat on the day (80.41 -0.01 -0.01%). The Euro (139.91 +0.62 +0.45%) and Cdn Loonie (86.61 +0.16 +0.19%) lifted against the Yen (104.22 -0.28 -0.27%) and the Pound (163.71 -0.35 -0.21%).

The three days of auctioning US 2 to 7 year notes apparently went well, but traders suspect that a group of central bankers acting in concert purchased the majority of the offerings. In bond market trading, the US long Bond soared ($USB 118.02 +1.45 +1.25%), while the yields for 30-year (4.329 -0.96 -2.17%), 10-year (3.546 -1.39 -3.77%), and 5-year (2.598 -1.03 -3.81%) all dropped. Treasury bill yields were soft (0.165 -0.15 -8.33%) for the second day.

For the third straight day, $GOLD closed with a solid gain (939.20 +7.60 +0.82%). That led to more buying among the miners ($XAU +4.1%).

Crude Oil was stronger (70.23 +1.56 +2.27%), apparently on reports of violence in Nigeria.

The Euro was stronger early this morning (1.4080 +0.0095 +0.68% 06:01am ET), which if it holds would be the highest close this week.

Spot gold, palladium, platinum and silver are looking much stronger, at: (944.90 +2.95 +0.31% 06:16am ET); (242 -1 -0.41% 06:08am ET); (1206 +7 +0.58% 06:12am ET); and (14.22 +0.03 +0.21% 06:16am ET), respectively.

US equity futures for the DJIA are indicating a flat to lower opening this morning (8398 -16 -0.19% 06:01am ET). But wait 15 minutes and the weather will likely change.

Comments

[DaveW:]

Bill, in my opinion this just isn't going to happen. Market is looking very weak on many fronts. Dow, S&P, Emerging Mkts, all putting in bearish head and shoulder chart patterns. Simultaneously, the VIX has interacted with a 3yr trend line which has previously yielded 44%, 105%, 93% and 370% rises in the VIX in the following 30-90 days. We gap down monday, the next test of 880 will complete the H&S and 880 will not hold. Collect your rally gains, and soon.

Jun 27 10:38 AM

[one eye:]

How about the Golden Cross on the S&P, or is this another Indicator the Bears are going to choose to ignore?

Jun 28 02:58 AM

[DaveW:]

one eye,
can you say 'whip-saw'? not all golden crosses bear fruit. Take April 2002 for example, that golden cross didn't end well. In addition, note that the rally of late '01/early '02 saw some actual correction periods, normal and healthy market breathers. As opposed to our current, taxpayer-sponsored, rally which did not experience significant pullbacks, this propping up created this 'artificial' golden cross. I believe it is a nasty trap, set your stops and be ready to go short.

Jun 28 05:59 PM

[PutneyHillYank:]

Great chance to add ADZ and BGZ IMO

Jun 29 05:43 AM

[one eye:]

Not all, just 80%. Go ahead Buck the odds.

Though, I admit that Freya now has me cautious.

Jun 29 02:20 PM