SPX Recap

S&P futures are up 5 points right now but as you know the real action is in the metals arena. Gold and silver are up nicely again today. Its all about stimulus! Stimulus will put a floor under stocks and make PM's skyrocket and its as simple as that everything else is just noise. Its going to be next to impossible to short this market if the Fed is behind it, I learned that the hard way.

Yesterday, traders shrugged off news that the trade deficit jumped more than expected. Traders had been concerned over the spreading debt crisis in Europe in addition to an ongoing struggle to break the impasse over a reduction in the U.S. deficit. Rumors that the ECB is stepping into the currency markets also helped to create a bounce in the futures. A newspaper report saying six Spanish banks had failed new European banking stress tests—the results of which are due to be released on Friday—added to nervousness. The U.S. trade deficit surged in May to the highest level in almost three years, due to a big increase in oil imports, according to the Commerce Department. The deficit increased 15.1 percent to $50.2 billion in May. The NFIB Small Business Optimism Index fell -0.1% in June to 90.8.

The Tuesday session opened without a significant gap then SPX had a quick five point surge followed by a choppy hour with a downward bias. But the hour before noon was again upward about six points followed by two hours of slowly giving it back. Then the FOMCminutes were released hinting at QE3 and the SPX exploded higher ten points within just minutes before the euphoria disappeared about as quickly and just as sharply as it came. By the end of the session the index had surrendered all gains plus almost six additional point and closed at the lows of the day. 

 

 There were 176 components advancing and 295 components declining. On the NYSE 3,140 issues were traded with 1,278 advancing issues and 1,752 retreating issues, a ratio of 1.37 to one declining. There were 46 new highs and 37 new lows. The five day moving average of New Highs is 117 while the five day moving average of New Lows is 20 and the ten day moving average of Net Advancing is 465. The Net Advancing data indicates a bullish trend.

Tuesday’s volume was similar to Monday's volume. The intraday volume pattern shows a large spike in volume along with the release of the FOMC minutes. The Breadth Indicators are bearish after Tuesday's action but the McClellan Oscillator ten day average continues to be overbought. This would seem to suggest that this correction could have plenty of room to run lower, but then again you have the Fed to worry about if you are going to short.

Bonds and DXY are both at the top end of the range the dollar printed a big reverse (upside) hammer began after FOMC minutes but the long bond rallied. Bond action is a bit confusing or are they thinking the Fed will buy bonds, I don't know.