S&P 500 Recap and A Look Inside the Markets

Good morning, after what appears to have been a short covering oversold rally the futures are down a bit this morning. We also have the FOMC rater decision pending. Yesterday markets around the world were happy to hear of the news that the Chinese appear to be willing to lend a hand in the European situation. In addition, expectations were rising that PM Papandreou's new government would receive a vote of confidence today in Greece. .

Tuesday's session opened with a gap higher and didn't even think about going lower until just before noon. From noon until 2:00 pm the SPX gave back a mere four points before heading higher and putting the high of the day on the chart at 2:39 pm. The final hour was a bit choppy but the index refused to give back much of the day's gains as the SPX closed in the top 15% of the intraday range and right on the 1295 support and resistance line.

The index was pushed above 1280, buyers were in a panic that the train was leaving without them. Institutions that must report to fund holders at the end of the quarter were buying heavily today in fear that they were about to miss the next leg higher. While a breather is likely after a session such as this, can you bet that the institutions won't be buying the dip and will be protecting themselves, at least until quarter end?

For the SPX Index there were 429 components advancing and 45 components declining. On the NYSE 3,158 issues were traded with 2,614 advancing issues and 464 retreating issues, a ratio of 5.63 to one advancing. There were 68 new highs and 25 new lows. The five day moving average of New Highs is 33 while the five day moving average of New Lows is 57 and the ten day moving average of Net Advancing is 80.

Tuesday’s volume was heavier but still failed to exceed the ten day average. There were two distinct peaks in volume, both associated with large up moves on the SPX. This is a bullish pattern. Our Breadth Indicators look much more bullish this evening. The McClellan Oscillator is approaching overbought while the ten day average remains oversold; this has a tendency to be bullish until the ten day average moves into neutral. Continue to watch the Summation Index for a break above zero; today it finally reversed and is headed higher.

unable to upload charts for some reason, will be back later