What was a ceiling recently turned into a floor but can it hold? The S&P 500 index, which is a collection of 500 top American companies, was meeting resistance at 1320 and was creating the ceiling in the trading range. Now over the last few days it has held above 1320 putting that retracement into a possible new floor. Tomorrow we have the Supreme Court ruling on ObamaCare. And we have the 19th EU summit, yes the 19th summit since the Euro crisis. Needless to say investors aren’t expecting much out of this one. And there is more possible future downward pressure than possible upside on the horizon until we get to the Q3 earnings season.
The EU needs to create a banking union. This would be a pre-curser to the much harder fiscal union. Currently the EU is only a monetary union. Also there needs to be another stimulus package to spur economic growth.
Most are not expecting any central bank action until there is a coordinated central bank easing policy put int place, much like what we saw last year all in one day creating the largest up day that year in the market. That is the day of any day this year you don’t want to be caught on the sidelines. The day of coordinated central bank easing of monetary policy. And traditionally the FED which all other central banks are based upon eases policy in September (and tighten policy in May creating the sell in May and go away). However is the situation in Europe deteriorates faster and further than expected all projections are out the window.
The DOW (INDU) added 92 points, the S&P 500 (SPX) gained 12 points, and the Nasdaq (COMP) was up 21 points.
Housing data continues to come in positive helping to fuel the current rally and Durable goods orders for May increased 1.1%.
Google (GOOG) entered into the tablet market now as well with their Nexus 7 which will be available for $199 and ships in mid July. The tablet is made by a Taiwanese company Asus.
Oil rose 88 cents to $80.24 a barrel.
Gold rose $3.50 to close at $1,578.40 an ounce.
The 10-Year Note fell pushing yields up 1.62%