Five weeks ago, the Indexes closed at DOW 21,100, S&P 2415 and NASDAQ 6210 and on Friday, the Indexes closed at DOW 21,394, S&P 2138 and NASDAQ 6265. Now looking at what the markets have done the past 5 weeks, it doesn’t look like much at all, however in those 5 weeks, the markets have experienced a minor, but sharp correction in the Tech’s, that put the “Fear of God” into Money Managers, that has reminded them that “trees don’t grow to the sky”, so they have begun to shift some profits into the markets lagging sectors and in the end, this “ROTATION” will be why the averages can continue higher.
Not all of the Indexes have treaded water for the past 5 weeks, the Small Cap names of the Russell 2000 and the Economically Sensitive, Transportation Index have gone from breaking down at 1350 and 8800 on June 1st, to closing at 1415 and 9385 on Friday, which shows that the rally is starting to “lift all boats” and that is good for all Investors.
Technically, the Russell and Transports have room to to run to their highs at 1425 and 9600 respectively, but the DOW, S&P and NASDAQ, remain close to overbought territory, so barring any real good news from Washington, any rally might be short lived. Overall, the market rotation and the broadening of the rally, bodes well for the markets going forward, so if you have a profit in a rising group, it might be a good idea to take that cash and invest SOME of that profit in a market laggard at this point in time.
Overnight the Global markets traded higher across the board and in early trading, the DOW is looking higher by about 60pts. The Yield on the 10 Yr is flat at 2.15%, the Dollar is higher and Commodities are mixed, with Gold and Silver lower as Inflation fears fade, but Oil is trying to keep its 2 day rally going, now trading at its Resistance at $43.50.
Last week we had very little news to deal with, that is not the case this week, starting with today’s release of the May Durable Good report at 8:30. Later this week we have the Consumer Confidence, Home Sales, 1st QTr GDP estimate, Income/Spending , Chicago PMI and Consumer Sentiment numbers to deal with and with a increasingly Hawkish Fed, you have to pay attention.
Today’s Early Markets
DOW Futures— up 60.00 London – up 43.58
S&P – up 600 DAX – up 90.56
GOLD—$1247 August Nikkei — up 22.84
OIL— $43.50 August HangSeng — up 201.78
DOW RESISTANCE 21,520 S&P RESISTANCE 2446
DOW SUPPORT: 21,320 S&P SUPPORT: 2430/2425
$NASDAQ RESISTANCE 6270
$NASDAQ SUPPORT 6230