Comment: The major indices were all up strongly. Transports continue to make new all time highs suggesting confidence in the U.S. economy. . Breadth was very bullish with New Highs at 287 while New Lows came in at 8. The Russell2000 confirm the breadth numbers with another strong figure.
The Materials Sector +1.49% and Energy Sector +1.51%. (Good numbers for Australia.) Eight out of nine S&P Sectors were up, with Health the laggard, -0.06%. The Banking Sector showed renewed strength after two down days, +1.66%. Semi-conductors was even stronger after their two-day pause, +2.09%.
Europe: France +0.47% Germany +0.54% London +00.86%
Gold in U.S. Dollars is up +0.18%. Gold in Oz Dollars is down -0.53%. (We will continue to watch this closely as Gold traditionally comes into a strong seasonal period in the middle of July.) AUD/USD flat +0.77% to finish at 107.8. (Solid numbers for Australia.) EWA (the ETF for Australian shares) was up +1.72%, helped by the stronger Oz Dollar.
Technical Comment on the DJ Industrial Average: The DJIA finished at 12719.5. Above the 13-Day MA. Positive. Above the 150-Day MA. Positive. Indicators: Stochastic: 96.5. Overbought. Caution The 13-Day MA is above the 150-Day MA and heading up. Positive. RSI.9 is at 76.2. Overbought. In a region where retracements can occur. MACD Histogram above Zero . Positive MACD above Zero. Positive. CCI.14: +138.6 and dropping. Caution The indicators are into overbought readings. RSI.9 is now extreme. Caution. Some downside can be expected.
Chart Pattern
The chart has moved marginally above the next level of resistance around 12700. 12800 beckons. The chart once again poked its head above the upper tyne of the Pitchfork. That?s a bullish sign. If the market retraces (which is inevitable) a bounce off the Median Line of the Pitchfork would be positive. Even better would be a move down and then bounce before the Median Line is reached. Let?s wait and see what happens.
I think we?re back to ?buy the dips?, at least for the month of July.
Finally, above is a chart of the NY McClellan Oscillator. The NYMO is a breadth indicator based on net advances (Advances - Declines). It's much more complicated than that - but that's the basic idea. It is currently at levels not seen since last August. Often we need to see divergences develop on this oscillator to indicate a retrace. That hasn't happened yet - but the indicator does show an extreme reading. Caution.
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