Coolhand's Market Analysis

Yes, we saw many positive earnings reports today (that's not a surprise), and we saw some positive economic data too. And even debt ceiling talks seemed to strike a positive chord today (although nothing has been agreed upon by any means). It all added up to a relief rally that was really due anyway as a result of the oversold condition from yesterday, and to an extent, the losses from last week.

So stocks soared right at the open and closed not far off their highs of the day. And those gains more than retraced yesterday's losses.

Earlier in the morning, June housing starts showed an annualized rate of 629,000 units, which was much higher than the 570,000 units economists were looking for, while building permits increased to a rate of 624,000 from 609,000 in May.

So now that Tuesday's trading is behind us, has anything really changed? I don't think so. The President's announcement of his support for the gang of 6 debt ceiling proposal, while encouraging, is a far cry from a final resolution and is not the only game in town either. The rally was due and I see today's earnings reports and economic news as reasons to bounce this market.

Given the volatile nature of this market, I don't think a one day rally can be trusted. Especially if sentiment turns bullish on today's impressive run. But that remains to be seen.

And this is a news driven market too, so without a final resolution from Congress on that debt ceiling, we can turn again. The European crisis also remains alive and well.

Here's today's charts:



Today's action spiked both NAMO and NYMO, which pushed NAMO back above the zero line, while NYMO remained negative. NAMO also flipped back to a buy, but not by much.



NAHL and NYHL also improved, with both crossing back up through their respective 6 day EMAs. That flips them back to a buy condition.



TRIN and TRINQ both spiked lower, with TRIN now suggesting a moderately overbought index, while TRINQ only modestly so.



BPCOMPQ turned back up, but remains on a sell.

So the signals are now mixed after signaling an unconfirmed sell condition yesterday. Officially, the system remains in a buy condition.

I don't have much to add here and my outlook has not changed. I was looking for a relief rally and now we have one. And while we may get some follow-through to the upside tomorrow, I'm thinking market headwinds will keep it limited. But that's up to the market.

So we'll see how things play out, but I'll continue to watch it from the G fund.