Still Bullish, some divergence on New Highs and New Lows showing some upside follow through weakness. $Study

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Asia – CLOSED
• Shanghai (China) +0.37%
• Hang Seng (Hong Kong) -1.11%
• Nikkei (Japan)-0.32%

Europe as of 6:38am EDT

• DAX (Germany) +0.25%
• FTSE (UK) +0.12%

Today's Economic News:

Mixed numbers from the UK, but overall, getting better.  The 2 year German bond joined the negative interest rate group.  That can't last for long.  In the US, housing numbers will start out our day @ 8:30am moving into the upbeat rapping of BB Nank with a backdrop of Oil and Gasoline inventories (The API numbers yesterday showed gas as a drawdown, that is bullish on RBOB).  We will get the Fed Beige book at 2pm today.  Those are the chart toppers for today.

Quote of the day:
Glory is fleeting, but obscurity is forever. – Napoleon Bonaparte

Current Allocations from our room:

Performance Month to Date from our room:

Current Breadth Readings:

ES SP500 Futures Comments:

US Dollar DX Futures Comments:

TLT Twenty Year Bond EFT Comments:

We are bullish, this I know, for the charts tell me so.

This chart, however, is showing a little divergence here.  It is the ratio of New Highs to New Lows and put in a down day yesterday, despite the positive price action.  That “bears” watching over the next couple of days.  We would to see the NH/NL chart  move up to the high 80s/90 area.

Short: 1366
Long: 1340

Our position is bullish, needing conviction.  We need a push, a decent 20+ S&P point day, to convince us there is some buying power under this market.  This 1360 area is critical as it is the 6/17 highs and forms a right shoulder top that the bulls are going to need to obliterate.  We think 1366 will be the next upside push target, with the market doing a little thinking and dinking and testing there.  That buy at the 1340 area yesterday was very powerful and we think that is the current floor under the market, assuming no drastic economic changes.

We look forward to moving out of OPEX and watching the market adjust to earnings and outlooks over the rest of the month of July.

The fly in the ointment for this market is the Dollar and Bonds, both of which need to show some sign of topping and breaking.  The DX is going to need to put in that lower high and then breakdown below 83, and then eventually down to the 81 area.

TLT is coming back down, the question is will it be a handle of a cup or a reversal?  We will pick that 127.50 area as a line in the sand between breakdown or handle forming.  If we reverse back up shy of that area and hit 130.50 within the next couple of weeks, the bulls better watch out as this points to a 136 target on TLT!  More of the pattern needs to be revealed and some concentration before we can make that call, though.  A break below 127.50 and maybe the bubble has burst or at least burped.

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