The S&P 500 has made it through a couple of key resistance levels as it closed above the 50-day EMA and the top of the descending trading channel.  The new higher high allows us to draw a new rising support line (blue) connecting the mid-June low with the higher lows.

                         
                        Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

The market leader Dow Transportation Index also made a higher high to give us a new line of support, but there is some descending resistance just overhead as we start to see the indices get overbought.

                        
                                    Chart provided courtesy of www.sentimentrader.com

With the NYSE overbought / oversold indicator near +600, this rally should get a test of its strength as this +600 - +700 area has been where rallies have died during the May / June pullback.
                          
                                    Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk

Today is the last day of the month and the 2nd quarter and some of this buying could be attributed to window dressing.  The trading day prior to the 4th of July has a history of being quite positive, but things cool down for a couple of days afterward - historically.


                                    Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk

You can see in the July seasonality chart down below that the 1st trading day in July has a strong positive bias while days #2 and #3 do not, but things bounce back quickly thereafter.  But the first weeks in April, May, and June this year have all been quite negative.

The thing is that based on sentiment in many of the indicators we have been showing, such as surveys, put/call ratios, and the Rydex cash flow ratio, many investors are under invested and they could be looking to buy any dips.

Thanks for reading!   We'll see you back here tomorrow!