Stocks opened lower again on Wednesday, and again buyers stepped up to buy the early dip. The S&P 500 closed at another new high while the Dow gained 15-points. The small caps led the way higher and bonds were down slightly.
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The economic data were mixed with the ADP Employment report coming in lower than expected, but the ISM report was better than expected. The latter was reported after the market opened so perhaps that is what brought buyers in.
The SPY (S&P 500 / C-fund) is pulling a 2013 rally on us as it rides along the rising resistance line while the indicators are mostly overbought and volatility remains quiet. This drove the bears crazy in 2013, and the new highs are likely doing the same right now. The upside target of the inverted head and shoulders breakout would be between 194 and 196.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq 100 (QQQ) also made a new 52-week high after breaking back over the March highs, which it had temporarily fallen below. For five consecutive days, the QQQ moved below the March high intraday, then closed above it.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Small caps had a good day Wednesday but there could be a battle the rest of the week between the short-term rising support line (red) and the resistance from the 50-day EMA.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Transportation Index could not close in positive territory yesterday, making it one of the lagging indices. This market leader looks a little "toppy" here as it backs off from resistance, but the rising trading channel is narrow and support is not that far down - about 1% or so.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds were down slightly and the AGG fell below some key support on Tuesday (red), but there may be a little support from the old resistance line (blue.) Buying the dips in bonds has worked for a long time, but the recent breakdown may mean a test of the 50-day EMA if the blue line does not hold.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Tomorrow (Friday) we get the May jobs report and estimates are looking for a gain of about 220,000 jobs, and an unemployment rate of 6.4%.
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Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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