The market direction outlook for today was for stocks to move sideways with a bias higher. In my market direction outlook last night after the markets closed I commented on the reports from China on the Purchasing Managers’ Index for June rose to 51.0 which would indicate a pick up in the Chinese economy. While many statistics from China are rather difficult to determine their true accuracy, the news was probably going to be enough to push the markets higher for Tuesday.
Meanwhile the US manufacturing index dipped slightly from 55.4% in May to 55.3% in June which basically means no actual rise, but not a pull back either. New orders index however climbed another 2 points to 58.9% from 56.9%. Production however slipped from 61% to 60%. All in all though, these figures continue to point to a strengthening manufacturing sector.
Both of these reports were enough to push stocks higher this morning.
S&P Market Direction – Morning
The one minute chart this morning shows there has been no selling pressure to speak of. Stocks have moved higher throughout the morning. I am expecting some selling in the lunch hour, a sideways afternoon and then a push to close at or above the morning high of 1973.
Advance and Decline
Momentum continues to favor higher valuations. Advancing issues made up 73% of the trading volume and 26% were declining. Volume by 11:30 was already at 1 billion shares which points to a slightly lower volume for Tuesday but probably more on par with Monday. New highs by 11:30 were at 285 while new lows were just 5.
Market Direction and 1956 Level
I have indicated 1956 as a pivotal level for over a week now. Today continues to show the strength building around the 1956 valuation on the S&P. The longer the market stays above 1956, the more support will grow for any dip back to this level. If the market closes around the 1973 level today it will be 0.8% higher. While just 17 points higher, it is the fact that the market continues to stay above 1956 and no longer test 1956 which will build more support. 1956 definitely is quickly becoming a pivotal valuation for this rally.
SPX Market Direction Outlook Into The Afternoon
Into the afternoon stocks will definitely close higher. The Dow and S&P are into virgin territory again which means less resistance to more movement up. Often stocks can be self-fulfilling. With so many investors bullish and unwilling to sell their shares at this point, moves higher basically confirm what these investors believe. Namely that stock prices are moving higher. Every move up then draws in more investors and more capital pushing stocks still higher.
At the present time bears need a catalyst to the downside and to date no catalyst they have found is strong enough to derail the bullish sentiment. The upturn looks set to continue for at least this week, if not longer.
Internal Stock and Option Trades Links
Put Selling Strategies For Members
Covered Calls Strategies For Members
Profit And Income Strategies Index
Stock and Option Strategies For Members
Stock And Option Trades Explained For Members