No Reason to Take the Short Term Trend Away from the Bull Camp Today

OVERNIGHT CHANGES THROUGH 6:05 AM (CT): S&P 500 +50, DOW -8

While the new highs for the move overnight weren't exactly dominating, the markets have generally maintained a positive track into the last day of a holiday shortened week. While the market might not see the Italian economic readings as that important, we think that news of a 1% rise in May Industrial Production from a Euro zone country is a positive for global equity markets. It is also possible that news of a decline in a UK inflation reading is seen as a positive, as that might allow the UK to leave rates low for a longer period of time. In fact, the bull camp is probably happy just to be in a position to think there is even a debate on where interest rates are headed, as over the last month, numbers have been so slack that there hasn't been any debate on rates. US equity players are starting to shift their focus toward up coming corporate earnings but with the prospect of a stimulus package from Washington increasing in our mind, it is possible that stocks could continue to forge short covering like gains on the charts off the hope for more help for the struggling economy.

S&P 500: The September S&P appears to be poised to make a run at the 1075.00 level on the charts. However, the market might lack the bullish incentive and the fundamental news flow to forge another sharp leg up today. Initial resistance is seen at 1070.90 in the September S&P contract this morning with initial support pegged at 1063.00. The path of least resistance appears to be pointing up, but the bull camp might lack momentum to carve out definitive gains today.

DOW: While the bulls have been lucky to see consistent gains on the charts recently, the market saw enough positive news yesterday morning to justify the range up move and we now think it is possible that the trade might try to fuel further gains off stimulus talk. While a series of Fed members and IMF officials have suggested that advanced economies shouldn't apply additional stimulus, it is an election year and Washington has shown over the last year that politics and Party take precedence over the long term good of the citizens. We see critical support in the September Mini Dow at 10,043 and little in the way of resistance seen until the 10,141 level. Down trend channel resistance (off the April and June highs) is seen at 10,315 today but we don't see that level being tested in the action today.

NASDAQ: The Nasdaq hasn't initially managed a fresh new high for the move in the early action today, but lately the Nasdaq has been a follower instead of a leadership market. Until the September Nasdaq manages a trade above the even number 1800.00 level, that area should be seen as resistance. The next resistance zone on the charts is seen up at 1809.50. With Banks stocks leading the European markets higher overnight, it is not surprising to see the Nasdaq lagging behind the rest of the market. Therefore Nasdaq traders should look to the action in the Dow for guidance early today.

STOCKS TECHNICAL OUTLOOK:

Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report.

S&P 500 (SEP) 07/09/2010: Stochastics are at mid-range but trending higher, which should reinforce a move higher if resistance levels are taken out. The cross over and close above the 18-day moving average is an indication the intermediate-term trend has turned positive. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next upside objective is 1078.00. The next area of resistance is around 1073.90 and 1078.00, while 1st support hits today at 1060.10 and below there at 1050.40. 

S&P E-MINI (SEP) 07/09/2010: Momentum studies are trending higher from mid-range, which should support a move higher if resistance levels are penetrated. The intermediate trend could be turning up with the close back above the 18-day moving average. The market has a slightly positive tilt with the close over the swing pivot. The near-term upside target is at 1078.62. The next area of resistance is around 1074.25 and 1078.62, while 1st support hits today at 1059.75 and below there at 1049.63.

NASDAQ (SEP) 07/09/2010: Daily stochastics are showing positive momentum from oversold levels, which should reinforce a move higher if near term resistance is taken out. A positive signal for trend short-term was given on a close over the 9-bar moving average. It is a mildly bullish indicator that the market closed over the pivot swing number. The next upside objective is 1822.75. The next area of resistance is around 1812.50 and  1822.75, while 1st support hits today at 1783.50 and below there at 1764.75.

DOW (SEP) 07/09/2010: Momentum studies are rising from mid-range, which could accelerate a move higher if resistance levels are penetrated. A positive signal for trend short-term was given on a close over the 9-bar moving average. It is a mildly bullish indicator that the market closed over the pivot swing number. The next upside objective is 10081. The next area of resistance is around 10062 and 10081, while 1st support hits today at 9988  and below there at 9934.

MINI-RUSSELL 2000 (SEP) 07/09/2010: The daily stochastics gave a bullish indicator with a crossover up. Daily stochastics are showing positive momentum from oversold levels, which should reinforce a move higher if near term resistance is taken out. The market's short-term trend is positive on the close above the 9-day moving average. The close over the pivot swing is a somewhat positive setup. The near-term upside target is at 627.8. The next area of resistance is around 624.6 and 627.8, while 1st support hits today at 613.4 and below there at 605.4.

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