After a tentative night of negotiations in Europe, the S&P 500 futures went from "no deal" steep losses to sharp gains in the blink of an eye after a "deal" was made. The result was a gap open in the cash indices and the Dow ended the day up 217-points, closing near the day's high.
The U.S. charts look pretty good at this point, but China's and the European charts are at a make or break point as resistance is standing in the way. I guess there is another important thumbs up or down vote on the new deal in Greece on Wednesday so we could be going through all of this again, so don't get too comfortable yet.
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The I-fund lagged the U.S. indices on Monday as their charts hit resistance, and bonds were basically flat.
The SPY (S&P500 / C-fund) gapped up and flew past the 50-day EMA and above the two-week consolidation between 204 and 208. The 200-day EMA looks safe for now and this chart actually looks pretty good, but I am still a little concerned with the overseas markets. The gap is there to be filled on the SPY so expect a pullback at some point. Prior gaps similar to yesterday's were filled rather quickly so don't be surprised if something causes a little panic out there again. Perhaps the vote in Greece on Wednesday will be the catalyst?
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The S&P 500 moved back above the 100-day EMA - a level we check in with every once in a while to take the pulse of the market. The last pullback was a little too close for comfort, but we do still feel a pulse.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (S-fund) found support that the 200-day EMA and has now made its way back above the 50-day EMA. There are a couple of open gaps on the chart that may need some attention. There's the small one left open near 1120, and now a larger gap down near Friday's highs near 1104.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index gained over 1% Monday but it is still mired in a bear market and a descending trading channel. When in a bear market, expect bearish results until it proves you wrong. Of course a bearish Transportation Index is not healthy for stocks in general.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE index / I-fund) hit the bottom of the large overhead gap (blue) and the 50-day EMA, and stopped in its tracks. There are still two large open gaps below and the relative weakness in the EFA on Monday could be because they know the vote in Greece on Wednesday is not a done deal.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The German DAX remains in a descending trading channel and hit the top of that channel and the 50-day EMA like a brick wall and stopped on Monday. Big test here.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Shanghai Index also hit a wall in the form of the top of its descending trading channel after 3 straight solid days of gains. It is up about 18% from the lows last week so if this is a "dead cat bounce" it could be over. Another test for global markets.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) was down slightly Monday and the chart remains in some trouble. The bottom of the open gap below and the support line near 108 are its only hope at the moment. It could also try to fill the overhead gap in the short term.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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