Futures pointing higher.

Now that the US has officially left the Iran nuclear agreement markets around the world are responding higher.  Perhaps not the catastrophic event the media spin was alluding to, at least for now.  With Futures pointing higher the Dow and SP-500 poised to break the above their 50-day averages at the open.  A very welcome site if you happen to be bullish.  Getting above this important level is one thing,  now it’s up to the bulls to prove they can hold it as support.  Something they have been unable to do since early February.

Although inflationary pressures continue to creep up economic data continues to show remarkable strength in the economy.  With the majority of earnings reports continuing to come in strong perhaps the bulls will find the energy to hold on this time.  As we head into summer, I would not expect the market to reclaim the glory of the 2017 rally, but it would be nice to see it stabilize and settle in above this key support.  There is still a lot of resistance above that will have to be dealt with but holding above the 50-day average would be a good start.

On the Calendar

The Economic Calendar on this hump day has two potential market-moving reports.  At 8:30 AM Eastern the PPI report expects a 0.3 percent in April for the headline number.  Excluding food and energy forecasters see a 0.2 percent increase and 0.3 percent increase if you also exclude trade services.  The EIA Petroleum status report has seen a short-term trend of declining supplies which in turn has helped support rising oil prices.  There is no forward forecast of oil supplies, so it’s always a true market surprise.  The remaining events on the calendar include 7:00 AM Mortgage Applications, 10:00 AM Wholesale Trade, and two 1:00 PM Bond auctions, none of which is expected to move the market.

On the Earnings Calendar, I show 371 companies stepping up to report quarterly results.

Action Plan

Yesterday the market traded in a tight range as it seemingly waited for the Presidents decision on the Iran Nuclear deal.  Oddly enough after we learned the US would be pulling out of the deal, there was still a very little reaction as the market seemed content to rest another day.  The DIA and SPY both closed the day just below their 50-day averages while the QQQ’s and the IWM found the energy to hold above as the market seemed to be struggling to make a directional decision.

This morning the Dow Futures are suggesting a substantial gap up of more than 100 points with both Asian and European markets trading bullishly.  It would seem the US leaving Iran agreement is of little concern to the markets at this point with the bulls pushing for higher prints.  If the futures remain strong through the rest of the morning, the DIA and SPY look to break the resistance of their 50-day averages.  The question now is can the bulls hold this important support which they have not been able to do since early February.  Here to hoping they can!  Remember with so many earnings reports still to come that fast price and volatility are still possible.

Trade Wisely,

Doug