The Stock Bulls Control but We Think Rate Hike Delay Has Been Priced

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Chart-595A dovish Fed, gains in international equities and more gains in WTI Crude Oil overnight has lifted the markets to another round of fresh highs. Early afternoon comments from Fed Chair Janet Yellen yesterday indicated that the economic progress continues and that the positives are outweighing the negatives. Given reduced near-term prospects for a Fed interest rate hike the trade is at least temporarily cheered by the idea that historically low interest rates are expected to remain in place for a while longer. US corporate earnings are expected from Michaels Companies ahead of the Wall Street opening, with VeriFone Systems reporting after the close of business.

S&P 500: As suggested already the bull camp has started out another session with an edge and we can’t argue against more gains in the face of scheduled US data. We do suggest that traders be on the lookout for rekindled “valuation fears” as soaring stock prices on top of a lack of positive momentum in the US economy should have some eventual limitations. Up-trend channel resistance today is seen up at 2122.50 and support moves up to 2106.50.

Other US Indexes: The Mini-Dow enters the trading session poised to break above an even number 18,000 level and that might be expected to garner some optimistic dialogue especially if the cash Dow manages to climb above 18,000 today! Up-trend channel resistance is seen up at 18,069 and support moves up to 17,903. Another new high for the move in the Mini-Nasdaq suggests that more gains are in order but we still think that the lower cap tech sector issues are destined to lag behind the rest of the marketplace. Initial support in the June Mini-Nasdaq rises to 4523.50 today.

TODAY’S MARKET IDEAS: A further delay in US rate hikes has provided the latest pulse up wave. However, at some point we have to wonder if fresh valuation fears will surface. In fact, the combination of softening US economic data and perpetual new record highs is precarious. However, in the short term the bull camp holds control.

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