It was a lazy and low volume summer Monday, but the tape quietly rallied. Every sector ended the day in the green with the technology and consumer discretionary stocks leading the way higher, though the all-important financial sector was a mixed bag of nuts.
Some of the notable individual performers on my screens were Microsoft (NASDAQ: MSFT), VMware (NYSE:VMW) and Lululemon (NASDAQ:LULU), all trading solidly higher.
There are a couple of things to be kept in mind regarding this week:
The Fourth of July national holiday is this coming Monday and as such we expect people to be sneaking away from their desks as early as Thursday afternoon for a long weekend; expect lower volume and a more random tape.
Second, the Greek parliament austerity vote is scheduled for this Thursday. The vote will decide whether Greece will get funding for two more years and a pass could ignite a rally while a failure to pass could potentially lead to panic selling due to contagion fears.
And lastly, there are only three more days of trading until the second quarter ends on Thursday. Window dressing is in full swing as is obvious by today’s rally in recent high beta leaders such as LULU, Amazon (NASDAQ:AMZN), and Green Mountain Coffee (NASDAQ:GMCR). Important to note is that markets don’t often trade lower during these times of the year and as such the aforementioned beta leaders might have higher to fly still in the coming day or so.
Looking at the S&P 500, yesterday the 200 day simple moving average held again, and while that may be a little too obvious of an impression, it is an important psychological level for many. Early in yesterday’s trading sellers tested out the waters but very quickly realized the buying pressure was just too much and let the bulls take over for the day.
On the Russell 2000 the picture was the same yesterday but the area between $805 and $810 has been tested several times and as such the chance of a break to the upside is increasing. The chart of the Nasdaq 100 (NDX) looks much the same.
Big beta stocks like Apple Inc. (NASDAQ: AAPL) made decent moves higher and in the case of AAPL is back above the 200 day simple moving average, and right at short-term horizontal resistance.
Microsoft too staged an impressive rally and while MSFT may no longer hold the significance it once did, it still is a name to watch as institutional investors leave marks going in and out of this large tech stock.
I am hesitant to read too much into yesterday’s session but given the above-mentioned agenda for this week it might be possible the bulls give it a shot in the very near term. Two things to add to that; First, the Russell 2000 would need to show me a move above that 810 level in order for me to believe in more upside. And second, I still foresee lower stock prices later this summer and autumn regardless of the potentially bullish action over the next few days as longer-term structural imbalances remain.
Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.
