Daily Market Update – July 6, 2016 (Close)
Yesterday was a day to take a little bit of a break.
After such strong gains following the large post-Brexit decline, it was probably a good thing to take that kind of a break and to set up a floor from where to make an attack on intermediate and all time highs on the S&P 500.
Both were a little bit further away as this morning was ready to get started, but both were still easy within reach and that reach got even easier by the day’s close as the market made a big turnaround and started posting gains by Noon.
Even more positive is that the market again closed right near its high for the day.
That was a trend that actually started last week, even on the solitary down day to begin that week.
The market now seems even pretty well positioned to start to attack those support levels at about 2112 and 2137.
The expectation would be that the 2112 may be breached fairly easily at this point, but may still need to be tested.
The 2137 will be more difficult, but days of consolidation of gains, such as yesterday and maybe again today can make it easier to make those assaults as a new level of support is created after the recent large gains.
Yesterday had the usual culprits for a weak market.
Oil was very weak, gold was strong and interest rates went even lower.
Add to that the strength in the US Dollar and you had the equation that would lead to stock selling.
This morning oil wasn’t very weak, but nothing else has really changed in the world, otherwise.
What did change was that oil reversed its direction and took the market along with it.
While the futures were again pointing to some weakness, I would have preferred that over the way the day finally worked out. Some modest declines may not have been such a bad thing, as the big picture evolves.
Today we got some more insight into what the FOMC had been thinking and we may continue to have reason to question the health of our own economy, although the doubts could be set aside with a rebound in the Employment Situation Report numbers on Friday.
That would certainly confuse things and probably further test support.
I don’t expect to be doing much more this week, having made a single purchase and with the big question marks that serve as overhangs.
That will all bring us to the following week and the beginning of another earnings season where we may begin hearing a lot about the risks associated with Brexit.
Those could serve as real headwinds to stocks as guidance may be pessimistic, but next week is still an eternity away.