This week traders are going to get hit by a news three-fer: the Fed, a pile of big name earnings, and the jobs numbers. Of these the Fed will have the largest sway over the markets.
With the S&P up 19% this year, the Fed’s quantitative easing program to buy treasury debt and keep interest rates low has kept the stock market going up at a record pace. Comments by Bernanke in May pushed the S&P down 6% but after that dip, the S&P has rallied 145 handles.
The jobs market is and always has been key to the future of Fed policy. This week employers are expected to add 185,000 new jobs, down slightly from June’s 195,000. Our view is that the jobs number isn’t the only number out this week. We have GDP, Chicago PMI, ISM and auto sales, just to name a few.
With the recent selloff and retest of the 1672 level we think it’s going to be clear sailing to S&P 1700 and beyond. Some bearish factors remain, like the last trading day of July, but that should not stop the S&P in the first part of the week.
We have stayed away from the two-sided calls of selling the early rally to just buying weakness and that’s where we are this morning, looking to buy weakness. Sure, you can sell the rallies, but what happens on those days that it keeps going up?
The trend is your friend, traders, and and all the thin chowders in the world are not going to stop that. Last week JPM’s Thomas Lee, who had called for the S&P to go to 1700 by the end of the year, raised his year-end level to 1775.
As always, please keep an eye on the 10-handle rule and please use stops when trading futures and options.
- It’s 7:15 am CT, and the ESU is at 1682.50, down 4; crude is at 104.87, up 17 cents; and the Euro is down 8 pips at 1.3271.
- In Asia, 8 out of 10 markets closed higher: Shanghai Comp. down 1.72%, Hang Seng down 0.54%, Nikkei down 3.32%.
- In Europe 7 of 12 markets are trading higher: DAX up 0.33%, FTSE down 0.13%.
- Today’s headline: Dollar under pressure as central bank meetings loom
- Total volume: 1.4mil ESU and 4.8k SPU traded
- Economic calendar: MONDAY: Pending home sales and the Dallas Fed mfg survey: TUESDAY: S&P Case-Shiller home price index, consumer confidence, FOMC mtg begins, Google Nexus 7 on sale; earnings from Barclays, BP, Chrysler/Fiat, Deutsche Bank, Merck, Pfizer, UBS, Aetna, NYSE Euronext , Amgen and Aflac. Motor vehicle sales, GDP, FOMC announcement, Bloomberg CCI, various Employment numbers.
- Fair value: S&P 1686.4; NASDAQ 3069.33
- MrTopStep Closing Print Video: http://mrtopstep.com/2013/07/mrtopstep-closing-print-07-26-2013/
