Last week started off with back to back, wishy, washy, low volume days, as the Investing World waited to hear what the Fed Chair Janet Yellen, had to say to Congress on Wednesday and Thursday. Nothing special was expected, since the Fed Chief and her Crew, have been touting the line, that the positive Employment numbers, would eventually lead to higher wages and Inflation, so raising Rates now, would be a good idea.
However, on Wed, the Fed Chair, threw the markets a bone, by telling our elected fools, that the Fed Fund Rate right now (1.25%) is close to where the Fed wants it, meaning that the odds of more than 1 more hike in 2017, are slim to none. The markets responded to the Fed Chair’s, Xmas in July gift, with a broad based, 3 day rally, that had the DOW, S&P, Russell 2000 and Transports all close at record highs, with the NASDAQ just 9 points away from setting a new closing high at 6321. Overall, the week was a pleasant surprise, after 6 weeks of range bound sideways trading, but the light trading volume, is an issue, but a win is a win.
Technically, as one might expect, everything is now extended and due for a break, but the reality is that with the U.S. and Global Economies all growing, slowly, but growing, plus with the World’s Central Bankers pretty much in sync, with keeping Rates low for the foreseeable future, which means that the only place for cash seeking higher Yields are in Equities, so this rally can continue. However, this doesn’t mean that there won’t be corrections, like the recent 3% drop in Tech’s, but, with the rally broadening out, there are plenty of opportunities, so do your homework, be disciplined and only buy at the right price.
Overnight positive economic data out of China, has the Global markets higher, but in early trading the DOW is up just slightly after a nice 3-day run. The Yield on the 10 Yr remains at 2.31%, the Dollar is lower and that , plus solid (but questionable) data out of China, has Commodities higher, with Oil testing Resistance at $46.50, Gold at $1230 and economically sensitive Copper back above $2.70.
We have a fairly light economic calendar this week so all we have today, is the Empire State Manufacturing report out at 8:30. Recent economic data has been disappointing, but if the data improves, the Fed can change its mind, so all the data is important, so pay attention. The 2nd Qtr Earnings season begins in earnest this week, so make sure you know when your companies reports to avoid surprises.
Today’s Early Markets
DOW Futures— up 10.00 London – up 12.58
S&P – up 200 DAX – down 48.56
GOLD—$1230 August Nikkei — closed
OIL— $46.60 August HangSeng — up 81.78
DOW RESISTANCE 21,650 S&P RESISTANCE 2470
DOW SUPPORT: 21,530 S&P SUPPORT: 2450
$NASDAQ RESISTANCE 6330
$NASDAQ SUPPORT 6270