While the economy is not really looking much better, the financial markets went roaring ahead this week. All of the major market indices set new highs for the year this week, finally holding steady in positive territory for 2009.

From a technical perspective, the stock market is now being solidly supported by both its 50 day MA and 200 day MA. On the top end, the 1,000 level on the SP 500 will provide the next resistance level. You should be able to use a pull back from that area to put on more favorable bullish positions.

JD

All that talk last week about the formation of a Head and Shoulders pattern in the stock market fizzled on the opening bell Monday. The SP 500 bounced off the neckline at 875 taking off like a rocket. This looks like an attempt to set a new rally high while confounding those (including myself) that would say this market has gone too far too fast.

A closer look at a stock chart and you will see a bullish divergence between the price action and several indicators, like momentum, stochastics, and MACD to name a few. It should not take more than a day or two for the market to decide if it is going to break through its June highs.

JD

A dismal jobs report put a damper on the financial markets 4th of July celebration of the stock market’s outstanding performance in the second quarter of 2009. Thursday’s fall of almost 3% took the SP 500 crashing through the support of its 50 day MA established only last week. Bullish traders are hoping the 200 day MA will provide some support in the coming week, but if the DJIA  is any indication, that will not provide any support for the market either.

A fall below 875 for the SP 500 or 8200 by the DJIA would confirm that this week marked the first Lower High since February.  The ‘green shoots’ appear to be suffering from the heat of a spring with too much sunshine and not enough rain to keep them from burning out.  The financial markets need to catch their breath. A pull back of at least 10 % from the highs will give them time to digest recent gains, and give those investors who missed the boat in March and April another opportunity to get back in.

JD