Good morning. The charts have returned to a bullish mood with Friday's price action and the developing gap open this morning. The Eurozone is learning that maybe the end of their union has been greatly exaggerated.
China is closed for the rest of the week but here is how the rest of the world traded overnight.
Asia
Japan opened strong but went a little weak during the afternoon and closed off the highs of the day.
Europe
London is leading the Eurozone back to the green but all three majors have fallen from their daily highs and are are sitting around the lows of the day.
United States
Economic news
We get to take another pulse reading here for the Northeast as the NY Empire mfg index comes in, expectations are for a fairly strong number.
Earnings
The pharmas put in some great numbers today I would expect that sector to show strength if we are able to rally our way out of the current correction.
Breadth Charts
40 DMA % Index
The breadth charts are beginning to look a little more bullish in here as we approach the 20 DMA crossing zone. If we can put in a good day today the NAZ and RUT could put in bullish number. Right now the charts have scored neutral since each index is below their 20 DMA. The chart scores a 0.
10 Day High - Low
Friday's action continued the bullishness of the 10 day High Low chart scoring now a perfect +6 with higher bars and higher 5 DMAs.
52 Week New Highs
Like the 10 day High Lows the 52 week chart also puts in a perfect +6. I wrote a short blog piece this weekend about the bullish prediction of this indicator.
Conclusion
| Chart | Score |
| 40 DMA % Index | 0 |
| 10 Day High - Low | +6 |
| 52 Week New Highs | +6 |
| Total | +12 |
We are just one chart away now from a perfect +18 score as we await the slow 40% DMA index to catch-up and confirm a rally off the bottom. There is plenty of resistance overhead to be worried about here but the bulls are showing some footing and the Friday's action showed an unwillingness to retreat.
$SPX
Despite a large gap down on Friday over the loss of Greece to default and the end of the world's reserve reserve currency the Euro the SPX fought back but was still unable to put in new highs. If this morning's gap holds into the open we should open above the 1079 line and it will be the bulls goal to hold that line and gap. I continue to worry about weakness at 1085 so watch that area.
The RUT on Friday was on fire and it has already closed its large drop from 2/4 in pretty dramatic fashion. Today if we can hold strength we could shoot up to 1096 in pretty quick fashion. That would make today a 20 point day on the SPX so watch out for clearing 1085 and then a fast ride up.
Bull game plan: Hold the gap and 1080.
Bears game plan: Collapse the gap and close below 1080.
See you in the room.
Marlin aka RedlionTrader
