Indexes continue to act well – a much needed rest was needed after extreme major overbought conditions a week ago and a very calm and measured pullback has occurred. Those conditions are now resolved. The S&P 500 gained 0.22% and the NASDAQ 0.37%. The Federal Reserve started a 2 day meeting today than no one expects ends in anything but another $10B reduction in quantitative easing. In economic news, the Labor Department’s consumer price index jumped 0.4 percent in May while the Commerce Department reported housing starts declined 6.5 percent in May, versus 12.7 percent in April.
With the S&P 500 we are at an interesting spot – we’ll see if this upper resistance creates an issue if we are to get a rally in the coming days. The NASDAQ continues to have a lot less issues overhead.
A quick look at the Russell 2000 which has bounced nicely off the 10 day moving average – it looks a lot like the NASDAQ, so these are 2 indexes that are moving, indicating people are taking on more risk.
Here is the NYSE McClellan Oscillator which is near 0; we’ve been focusing on the NASDAQ version of the same measure as it has been in areas of extreme the past 10 days.
Speaking of risk on, we mentioned solar as a sector to watch a few weeks back; when it runs it usually means the market is in an aggressive mode; you can see the sector ETF had a big day on big volume in a quiet market and broke out of a downtrend a while back. As always this is a very volatile sector and lose all its gains in a matter of week but a great barometer.
Weibo (WB) which is the Chinese Twitter and came IPO in mid April had a nice session; it is not yet old enough to have a 50 day moving average. Just keep in mind these stocks have a lockup expiration after 180 days so if you play in these waters, October is a key period.
Oil is holding up over its breakout level but of course is very news dependent on Iraq.