Today’s Spotlight Market
The stock market has shrugged off economic fears brought on by weaker indicators and the Brexit to post new highs. Many traders have been paring their expectations of further interest rate increases from the Federal Reserve. Japanese Prime Minister Abe?s party won a resounding victory in elections over the weekend. Abe ordered a new round of fiscal stimulus, but the size and exact details of the stimulus are not known at this time. The Japanese Prime Minister has been aggressive in attempting to get his country?s economy back on track, and the election victory gives him a free hand to draft economic policy. Japanese stocks responded well to the announcement, and it had a positive impact on global stocks.
Fundamentals
A major force behind the strength of the S&P is traders? belief that the earnings recession may have ended in the first quarter of this year. The recovery in Crude Oil prices, along with a weaker US Dollar, are expected to help earnings growth. Earnings are not expected to skyrocket, but may increase to respectable levels, which may be enough fuel to keep the stock market rally going. As the expectations of further rate increases from the Fed have fallen, so have the Dollar Index and bond yields. Decreased bond yields make stocks look comparatively attractive as an investment vehicle.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the September E-mini S&P reaching new highs. Since the market is in unchartered territory, one can only speculate where the market may encounter resistance. The market may find some resistance around the 2150 and 2200 levels. The recently rally in stocks has driven the RSI higher, but the indicator remains below overbought levels. If the market does become overbought, prices could come down to test previous resistance around the 2118.00 level.
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