Opening Market Commentary For 07-01-2014
Premarkets were up +0.30% this morning suggesting a positive market opening. US financial news was not to be announced until after the markets opened. However the averages opened +0.25% and shot up to +0.35 in the first 15 minutes on low volume.
By 10 am the June US Manufacturing PMI came with the strongest improvement in four years and moved the markets up to +0.45% pushing the SP500 to a new high of 1971.24 (and holding). But are these PMI numbers good enough to keep this bull market going?
Negative numbers are negative, evidently good for the markets when the June US PMI Manufacturing reported in at 57.3 lower than the 57.5 consensus and higher than the last report of 56.4 in May which is the strongest in four years say some analysts.
ISM Manufacturing Drops, Misses By Most Since January
ISM Manufacturing Drops, Misses By Most Since January
On the heels of Markit’s US PMI missing expectations but rising to itshighest since May 2010 (with notable inflation signals and [dominated] by weakness in small business) despite new export orders tumbling; ISM printed at 55.3, down from May and missing expectations.
Only 50% of survey respondent s expect to increase jobs – the lowest number in 2014.
New export orders also fell in ISM. Following last month’s utter SNAFU, we are not exactly sure whether this is real yet. So far the market reaction is positive to this bad news so we do not expect a revision…
The short term indicators are leaning towards the hold side at the opening. The all important signs of reversal, up or down, have not been observed so we are mostly, at best, neutral and conservatively holding. The important DMA’s, volume and a host of other studies have not turned and that is not enough for me to start shorting. The SP500MACD has turned flat, but remains above zero at 14.74. I would advise caution in taking any position during this volatile period.
