SHORT TERM: market opens mixed as cyclicals and techs move inversely
Overnight the Asian markets were mostly lower, with only China’s SSEC posting a gain. Europe came in about 0.55% lower as well, as profit taking moved across the globe. At 8:30 the Core CPI was reported tame at 0.1%, and Housing starts rose about 0.8%. Stock index futures rallied on the news after being lower most of the morning. At 9:15 Capacity utilization was reported to have eased a bit, and Industrial production rose slighty. Both figures will help the FED to determine the course of short term rates next month. I continue to feel they will be notched down 1/4 point to help the housing industry. At the open stocks were mixed, as the cyclicals continued to rally. The SPX posted another new high at 1471, and the NYA posted another new high as well. The techs, however, had other intentions, as bellwethers Google and Apple were moving lower right from the bell. The market has made a very nice move over the past three weeks, and this is options expiration week. A pullback would be normal, but the market may defy gravity and keep on going. Lots of shorts still in the market. The push down in the techs continued until 10:00, when the cyclicals started to rally again. Bonds are trading nearly 1/2 point higher, Crude is up 65 cents, Gold is off $1.25, and the Euro is approaching 136. At the moment, the SPX posted another high (1473), as did the NYA and the R2K. Short term momentum is overbought and is starting to display some negative RSI divergences at these news highs. SPX 1462, the previous resistance area, should now provide support. Earnings reports after hours, and throughout the week should provide additional input for the market. SPX uptrending its way to 1530! Best to your trading.
MEDIUM TERM: bullish
LONG TERM: bullish.