Futures were slightly lower when we were doing the Weekly Wrap last night but had battled their way back to near even just before the European markets opened this morning. They got progressively better before the markets here at home opened which lead to a nice pop at the start of trading. Economic news also came in better-than-expected which added a little fuel to the rally.
The Institute of Supply Management (ISM) Index jumped to a reading of 51.5 for September, up from the 49.6 print for August, which was a 3-year low. Wall Street was looking for a print south of 50 for the 4th straight month so it was a pleasant surprise. A reading over 50 indicates business is “improving”.
Bernanke is also speaking as we head to press which might be causing some of the pullback as he tries to defend QE3. He is giving a speech to the Economic Club of Indiana and said his monetary policy strategy “is the same as it always has been”. He went on to say that this round of quantitative easing was aimed at longer-term rates. With short-term rates near zero what else was he suppose to say?
The bulls immediately pushed prior resistance on the ISM news but the indexes have given back some of their gains as we head into the second half of trading.
The Dow is up 106 points to 13,543 while the S&P 500 is up 6 points to 1,446. The Nasdaq is trading lower by 2 points to 3,114 while the Russell 2000 is down a point to 836.
We said in our Weekly Wrap and this morning in our Daily the bulls needed to get a win today to avoid a possible trend change. The charts we showed you this morning outlined the first and second waves of support and resistance. We also said volatility would be picking up so today’s action doesn’t surprise us as the battle will be decided in the final hour of trading.
We have a lot to cover with our current trades which are holding up well. Subscribers, check the Members Area for the updates and we will be back in the morning with a full report.