Averages Push Up Into Resistance (DJI, SPX)

Both the Dow Jones Industrial Average (DJI) and the S&P 500 Index (SPX) are sporting gains of roughly 1 percent in late-morning trading today.

The indices are coming up on firm resistance at their respective 200-day Moving averages. The Dow is currently trading at 10,308 and traded as high as 10,318, one point above its 200-day MA of 10,317.

The S&P is currently at 1,103.71. It's 200-day MA is 1,108.31. While the rebound off the late May/early June lows has been impressive, a further push higher will be needed to determine if the nasty correction is over or if we are slipping into a full-blown bear market.

Given the oversold conditions, favorable interest rate environment, solid corporate earnings and increasing consumer confidence, I'd argue that what we witnessed these past few months was just a nasty correction (and much needed) in the middle of a cyclical bull market that began in March 2009. With copper futures up 3.4% and leading cyclical stocks like materials and industrials leading this rally, the markets may be telling us that the growth trade is once again back on.

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