Good morning. Futures are showing slight gains as markets try to shrug off warnings by Moody’s over the eurozone and refreshed skepticism over the Greek bailout. Here are the headlines:
- Moody’s cuts ratings, issues warnings (BL)
- European stocks rally on ZEW confidence (BL)
- Europe struggles over Greek details (WSJ)
- Greek economy shrinks rapidly (WSJ)
- Italy bond yields fall (WSJ)
- EU to punish Spain for deficits (REU)
- Bank of Japan signals more aggressive policy (REU)
- Weekly retail store sales fall -2.0% (ICSC)
- Small business confidence in a lull (NFIB)
- Obama & China VP hold talks (REU)
- Obama’s budget sets up tax fight (REU)
- Republicans offer to extend payroll tax cut (BL)
- U.S. Volcker rule faces harsh critics (BL)
- Airline group warns over carbon tax (CNBC)
- Boeing signs record $22.4 billion order (REU)
- BHP and Rio to invest in Chile mine expansion (BBC)
- Alcatel-Lucent seen as wireless leader (BL)
- Google wins approval of Motorola Mobility buy (BL)
Opening strength was sold, morning weakness was bought, and we closed again with gains overall on light volume. Yes, that was quick synopsis of yesterday’s trading action, but also of most trading days of late.
Following Friday’s gap down and, in spite of very negative seasonality and price action studies, the bull camp had no difficulty reversing us back higher yesterday and closing us back above the five day moving average.
After the jobs report gap, we’ve now spent the past 7 trading days in a tight consolidation zone without any significant price deterioration. While intraday price action reversal setups aren’t working as well as they did previously (which is bearish on that timeframe), the market is still holding strong on a closing basis and refusing to give into those who desire and expect a larger pullback. As I discussed in the Weekend Chart Show, so as long as we hold above S&P 1,330 amid all of the negatives the market faces this week we have to respect that the bull camp remains in complete control and align our positions accordingly.
Without a doubt, traders will be looking for a breakout from the current trading range to set up the next series of trades and that will be our primary focus as well particularly as we still have that confirmed cup/handle setup with a target to fill at S&P 1,366.