February has been pretty good so far. Since Friday's close the indices are up between 2 and 3%. The NYSE has been the leader with the Russell 2000 and the Nasdaq composite trailing the pack. We should see some leadership rotation in leadership over the next couple of days.
Around the world last night:
Asia
Convinced by two strong days on the US markets China played catch up last night roaring in a nice plus 2% gain over night. China closed on the highs of the day. The Nikkei had a mostly sideways day that closed nicely green.
Europe
As of 7 am Europe is positive and trading around its highs of the day. The DAX had a little selling at the opening but has recovered back to the highs.
United States
Currently the ES futures are around breakeven on this AM.
Economic news
ADP numbers are out at 8:15am and are a precursor to the Friday's numbers. ISM at 10am needs to be above that 50 number to show expansion. A weak number will insure that there is some GDP downward revision coming. Too hot a number and the interest rate hike fears will hit the streets. Watch the dollar around 10am. The crude numbers have posted two week in a row of draw downs. The Oil bulls would like to make it three weeks and the bears are looking for a positive build this week.
Earnings
We are still in the midst of earnings season with a number of companies reporting today. We have cable companies Comcast and Time Warner. Thermal Fisher a healthcare technology stock put in some good earning. Check on Black and Decker and the financial advisor Lazard.
Breadth Charts
40 DMA % Index
Two days now of recovery for this chart. While it is still scoring a neutral and will until we get a positive 20 DMA crossing, a two day recovery usually marks a change in the 5 to 10 day swing.
10 Day High - Low
The 10 day high-low is very bullish here. We have bottomed and are now cycling up. If we are to follow the October correction we should peak here in 7 trading days.
52 Week New Highs
New highs came in ok yesterday. Not as strong as I would have thought on a thrust like we are having here with a follow through day. Still the momentum is swinging. The NYSE scores a rare +1 (the 5 DMA is unchanged from the previous day). The Nasdaq and Rut both scored a +2 so the chart puts in a very bullish +5 from yesterday.
To continue to momentum we would like to see close to 40 NYSE new highs by 10am.
Conclusion
Our charts score a respectable bullish +11 today . The 40 DMA % index has corrected so far it will take a while before it can confirm. Momentum has swung from the bears to the bulls now.
$SPX
The bulls hit all their objective plus extra credit yesterday. The trend has been reversed and momentum now lies in the bulls camp. For a bull victory today all they need to do is maintain. The bears need to do the pushing now. If the bulls can close above this 1100 line they will have been successful today. An extra credit reach goal for the bulls is that 1111 line which is the 50% fib number for this correction.
The bears want to spoil the party and fail right here. A push below 1096 will show the bulls are still vulnerable and a push below 1090 will increase the probability of a retest or lower low. This is a high failure area where we closed last night so watch the opening for a selloff.
