After a weak open on Tuesday, stocks had a very nice day yesterday with moderate gains across the board despite some earnings scares. The Dow gained 56-points and the S&P 500 finally moved above 2800 with some conviction. The breakouts did not come on much volume as we are still in the summer vacation days, and actually July 18 is the start of the more negative portion of July's seasonality chart so there are some minor headwinds.
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Fed Chairman Powell was in Washington yesterday testifying in front of congress, and as you can imagine it was more of a political show but the Powell didn't bite on most of their partisan questions. He did say tariff's in general are not great for earnings but he seemed to back away from it, and he didn't really comment on the flattening of the yield curve despite it being a major topic of late on Wall Street.
What he did say is that the economy looks good, inflation appears to be under control, and they are going to continue to raise rates slowly as needed.
This was a boost to stocks in an otherwise uneventful day. The question is what happens next now that the Fed is out of the way, and of course it's more earnings.
The big earnings reports yesterday saw Netflix and Goldman Sachs disappoint but both rebounded to get back more than half of their larger early losses by the close, so the dip buyers were out in full force.
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Also, I'm aware of the issues we are having with the charts at the bottom of the page. Google has been making some changes and I just have to find something that is going to work to take their place.
The S&P 500 / C-fund saw a very nice looking positive reversal day but I'd be more impressed if there was any kind of boost in trading volume, but it was a typical quiet summer trading day instead. You can see that it broke above the March highs, but there is some possible resistance using the bottom of that old head and shoulders pattern we were once watching (red). This could be the start of an "F" flag, which is bullish in the short-term but they do get more dicey the longer the flag gets.
The small caps (S-fund) had a big day and rallied up to the top of their bull flag. Another positive day could mean a breakout, but there is also the double top resistance line to deal with.
The Dow Transportation Index was up but lagged a bit and was actually down for much of the day. It has been bouncing back and forth between the 200 and 50-day EMAs and that may continue today after a solid earnings report from railroad giant CSX.
The EAFE Index (I-fund) was up modestly and moved back above the 200-day MA and filled that gap from earlier in the month.
The AGG (Bonds / F-fund) dipped a bit and continues to trade just below the May high and just above the rising support line.
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