Last week the curtain finally fell on the Greek debt drama – if only for an intermission between acts – `and the Fed re-asserted its intention to raise rates in September – maybe, if nothing goes wrong. The Chinese market found short-term support thanks to extensive government support, and managed to stop the bleeding. Everything is wonderful in its own way, and the US market rallied again.

And then, late Sunday night but before European markets opened, the gold futures crashed $50 in a matter of minutes, taking the price down to $1086, a level not seen since 2010. The price has worked its way back up since then, but at this point we don’t know if the recovery will continue. There will be a lot of shaky gold traders drinking Maalox with their coffee when the COMEX opens this morning.

The S&P 500 cash index ($SPX) closed at 2126.64 Friday, up 49.92 points for a 2.4% net weekly gain. The index regained and held its yearly pivot level, after a short-term correction. Now it returns to the top level of the range defined in the past several months and gets ready to make a run at new highs, although Friday’s action showed some small signs of fatigue.

This week

We’re in earnings season. Better earnings from the Blue Chips could push the US market to new highs, and this mid-summer rally could continue until Aug. 6. The intermediate-term indicators are neutral and will continue to support the index. The short-term has an overbought condition, but nothing serious yet.

This week we could have a brief pullback, but if it happens it won’t last long. The 2100 level will be a major support. Any short-term buying signal will likely bring more buyers into this market. The beginning point of the current rally is about 2080. As long as the price doesn’t close below that level the short-term trend is up. Buying the short-term dips will likely continue this week.

ESU5

The S&P500 mini futures (ES) had a narrow range day (NR7) Friday. The current rally temporarily ran out of gas. Today we could see a range expansion move, perhaps with the price going up to 2127.25 first and then down 2105.50 later if the overnight trading holds above the 2112.75 level. If the overnight trading fails to hold, and drops below 2110.75, we could see the price drop to 2105.50 first and go up later.

Major support levels for Monday: 2100-98.50, 2092-88.75, 2065-68, 2043.50-45.50;
major resistance levels: 2134-36.50 and none

 

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Chart: SPX daily, July 17, 2015

 

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