Editor’s note: Serge Berger, the head trader and investment strategist for The Steady Trader, will be providing the Daily Market Outlook until Sam Collins returns on July 25.
Yesterday was a day marked by consolidation as investors were in a holding pattern ahead of the big EU meeting inBrusselstoday and further important earnings reports around the corner. The economic calendar was light, and despite action in individual stocks due to earnings reports, the major indices stayed fairly flat.
The leading sector was the financials, which of course, is the group that has lagged the market for so long now. In and of itself, that is good news not to be ignored, but technically the Financial Select Sector SPDR (NYSE:XLF) still has much higher to go before any sort of victory can be claimed.
The uneventful session can visually be depicted by the small trading range on the daily S&P 500 chart below. As such, technically not much changed on the major equity indices and the bullish biased after Tuesday’s rally remains. As long as the financials and energy sectors can positively contribute in coming days and weeks, stocks can move higher.
Given the boring session yesterday, let’s look at a longer-term chart of the S&P 500 for a little perspective. The five-year weekly chart of the S&P 500 index shows the uptrend channel in which the index has moved higher since early 2009, and confirms that we remain in this longer-term uptrend. It also clearly shows that the June lows coincided with the lower end of this channel. Of course it’s never this easy, but at least looking at the longer-term chart it feels as though stocks have plenty of room to the upside, all else being equal.
The most important chart on my screens remains that of the U.S. dollar and its narrowing trading range dating back to early April. As I continually point out, the chart is still making higher lows but has not yet made a higher high. Looking beyond the next few weeks, I still foresee a rising dollar into early autumn and beyond, and that would put pressure on stocks.
For today’s session, much hinges on the aforementioned EU meeting and a flurry of earnings announcements. As long as the 1,295 level on the S&P 500 can hold on a closing basis, higher stock prices over the coming weeks are likely.
For one stock that reports today that is in a confirmed uptrend, see the Trade of the Day.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
