Can the markets make a real positive move today?
We’ve been teased so many times on so many Mondays I hardly want to hope but, for today at least, we have peace in the Middle East as the UN calls a cease fire which allows Hezbollah to save face by giving up without actually giving up as things were going poorly for them to say the least.
It would be nice if the UN could call for a cease fire in Iraq where 62 people died yesterday alone but the UN generally only passes resolutions that they know people will listen to so that they don’t look too impotent.
The global economy is on fire with Chinese workers getting a 13% raise this year and European GDP far ahead of expectations. Wage pressures will be the story of the rest of the year as even US workers are starting to wonder if the paycheck may be greener elsewhere (with 4% unemployment) if their own boss doesn’t come through with an increase.
You’ll hear a lot about a blackout in Tokyo today disrupting trading but the real story is that the Asain markets are flying and not even a shutdown at the Nikkei could slow them down. Europe is also up about a point as the UK downgrades their terror level from “horrifying” to “very scary” but a lot of flights remain grounded.
Our futures are looking very good at the moment (6am) but we will have to watch out for the kind of pullback that gave us such a bad signal last Wednesday. We will obviously need some new leadership as commodities are likely to be a letdown today.
The Dow took a nice bounce off 11,050 on Friday (2 days in a row) so we will keep a hopeful eye on 11,200 but anything under 11,100 is a big signal to run away. The S&P will open well above the 200 dma at 1,270 so we will treat 1,280 as the make or break point for today – if the S&P cannot break 1,280, that will be our first caution flag.
The NYSE is again the one to watch as it is right on what is either a short-term floor or a consolidation point at 8,200. I consider it a red flag if this broad index fails to hold that line. As usual the Nasdaq can gain 100 points…