The markets turned in a mixed, week’s work of trading, with the NASDAQ, recouping all that was lost during its
3% correction and joining the S&P and Russell 2000, closing at record highs, while the DOW closed slightly lower
and the Transportation Index closed down, after a 3 week, straight up run. Overall, the U.S. Economy and the Equities
markets remain in good shape, with the Economy growing moderately, due to a strong Labor market, low rates and most
importantly little to no Inflation. The Equities market is benefiting by all of the above and solid 2nd Qtr earnings and revenue’s, which are helping to justify stock prices and the reality that with rates so low, there is nowhere to go for a reasonable rate of return on capital, other than the stock market. However, this “Goldilocks” scenario is fine and dandy as long as everything stays as is, but with so many moving parts, the odds of something going wrong are high, but for now enjoy the show.
Technically, we have a mixed bag with the S&P, NASDAQ and Russell 2000 extended to the upside, the Transportation Index extended to the downside, while the DOW is nish here or there, stuck in the middle. I think that with the volume shrinking on a daily basis, there’s a good chance that the averages will spend the next few weeks, rotating, which is not a bad thing, but it could make for a very dull summer.
Overnight, the Global markets traded lower as the Presidents new friends in Poland, are trying to FIX, the Polish Court
System, to suit the ruling Parties needs and that has the Poles taking to the streets in protest. Anyway, in early trading today, the DOW is off 30pts, the Yield on the 10 Yr is flat at 2.23%, the Dollar continues to tumble as the Presidents family and associates go to chat with various Congressional Intelligence Committee’s, this week. The falling Dollar has most Commodities higher, with Gold back to $1258, but Oil is lagging as OPEC meets in Russia.
Aside from the FOMC Rate Decision on Wed, where the FED is expected to leave everything as is, we have a full week of economic data out this week that includes, June Existing Home Sales today,Consumer Confidence on Tues, the FED on Wed, Durable Goods on Thurs and the 2nd Qtr GDP numbers on Friday.
All this, plus the Presidents family testifying this week, might keep players on the sidelines and that might increase the Volatility, so be prepared, for both trouble and opportunity.
Today’s Early Markets
DOW Futures— down 30.00 London – down 65.58
S&P – down 300 DAX – down 98.56
GOLD—$1258 August Nikkei — down 124.84
OIL— $45.80 August HangSeng — up 140.78
DOW RESISTANCE 21,680 S&P RESISTANCE 2480
DOW SUPPORT: 21,500 S&P SUPPORT: 2460
$NASDAQ RESISTANCE 6400/6420
$NASDAQ SUPPORT 6360