Market Alert - The Close

One sessions and one hour was all the market could stay down. The siren song of crappy European data, worries about China being the biggest bubble the world has ever known, compliant central banks, and US data that somehow manages to tickle hopes of a US recovery (yes again) keeps bringing the buyers back.

Thus, a 120+ point Dow loss tuned into a 78 point gain by the close. Low to high in more classic bull action.

SP500 11.18, 0.54%
NASDAQ 36.26, 0.75%
DJ30 78.00, 0.44%
SP400 0.52%
RUTX 0.69%
SOX 0.15%

VOLUME: NYSE +5.5%, NASDAQ +4%. Better volume on a test lower and reversal positive. NASDAQ trade barely made it to average if it did. NYSE moved back above average after a 2-day hiatus.

A/D: NYSE 1.8:1, NASDAQ 1.6:1.

So, instead of a 'Brollover,' stocks continued the Brelief move. Of course, so did bonds and gold, both continuing their rather impressive runs. Even oil got back in the game, rising $0.64 to 47.37. After hours it is higher as API inventories show a 6.73M bbl draw, the largest since this time last year. Surprise! Summer driving season and people are using more oil and gas.

Okay, a little more Brelief move with SP500, DJ30 and SP400 holding the 50 day MA's on the test and bouncing. No new highs or breakouts or anything like that, just holding key levels on a test and bouncing back.

NASDAQ recovered from undercutting the convergence of the 50 day MA's and the 200 day MA as the Big Names enjoyed leadership status once again -- along with utilities, great company indeed -- helping NASDAQ hold the line in its efforts to test the April and June twin peaks.

RUTX and SOX were up off of reversals from morning lows. RUTX held the 50 day MA's and looks reasonably decent. SOX reversed off a pretty sharp reach lower, but it still closed below the 50 day MA's. SOX was up thank goodness for the bulls, but it was not really helping itself, just hanging on.

That leaves SP500 and DJ30 well-positioned to try higher and test the top of the three month range, the one they bombed out of on Brexit but then recovered in Brelief. A shakeout, a recovery, still in position to try the move higher. Not holding my breath on SOX or RUTX, but oftentimes it is best not to hold your breath in the market as it makes you impatient. Leave holding your breath to jumping in the lake, fleeing from tear gas canisters fired to disperse legally assembled citizens, or to cover the stench of the FBI whitewashing over broken laws by our leaders.

Leadership was a strange mix. Big Names as noted, some industrials, software jumped back, some chips are at support and trying to bounce, some metals bounced decently -- particularly the precious metals, some drugs and biotech are working. Big names such as JNJ, MO continued moving higher. Then there are the utilities continuing their run. As noted, a strange mix of safety along with some more aggressive areas.

We picked up some BLUE (biotech) and bought some TMO puts early and they were thrown back at us.

The market indices recovered from a dip lower and held their ranges. Often that means they are ready to move higher after a shakeout. If the common belief is that central banks are and will remain ready to aid markets, economies, the ruling elite -- the usual group -- stocks can rise higher. Along with bonds hitting all-time highs and gold soaring. Those ALWAYS mean good times ahead, right? Of course they could also be moving just on the notion of central bank largesse . . . certainly that is part of it, but when you look at bond markets in other countries where the economy resembles a toilet in a park after a July 4th celebration, they are not moving just because a central bank might throw some stimulus their way.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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