Global stock markets are trading better which is leading to a call for a higher opening in the U.S. this morning. Traders are putting risk back on the table as tensions have eased in Greece due to the working out of a potential bailout plan. In addition, the Fed remained dovish in its FOMC policy statement which gave traders the green light to buy equities. The overnight rally in the June E-mini S&P 500 has put the market in a position to test a key 50% level at 1196.75.
U.S. equity markets rallied to a new high for the session on Wednesday after the Fed left interest rates unchanged at historically low levels and remained soft in its statement regarding the future of interest rate hikes.
Earlier in the session the stock indices bent a little bit but did not break after the Euro broke sharply following an S&P Corp. downgrade of Spain’s debt. Although investors seem to be a little more cautious about holding long positions at current levels, they don’t seem as worried about the worsening situation in the Europe as they did on Tuesday. This could be because they feel a solution is close due to the on-going dialogue between Greece and the EU/IMF.
Technically, the June E-mini S&P 500 main trend turned down on the daily chart when the market broke through the last main bottom at 1179.75. The lack of follow-through after breaking this price indicates that there were more buyers looking to enter than sellers looking to pressure the short-side. The key will be what traders do when 1196.75 to 1201.50 is tested. If the market is topping then sellers will step in and form a secondary lower top. If the market is going higher then it should easily blow through this retracement zone.
June Treasury Bonds are trading mixed after finishing lower on Wednesday after tensions eased in Greece. Traders took profits early in the session when it became apparent that the EU/IMF was close to inking a 3-year deal with Greece to help with its debt crisis. The closer Greece and the EU/IMF come to working out an agreement, the more likely the T-Bonds are expected to break. The charts indicate that a break to 116’16 is likely over the near-term.
Overnight, June Gold is trading lower. Traders are paring positions initiated earlier in the week despite the weaker Dollar as the prospect for a collapse in the Euro diminishes. Investors were buying gold on speculation of the demise of the Euro. Buyers were clearly taking hedge protection against paper money in case the European debt problems begin to spread to the U.K. and Japan. A weaker Dollar is likely to underpin gold, however, if a bailout deal is approved between Greece and the EU, traders may begin lifting long hedge positions, putting downside pressure on precious metals.
The weaker Dollar and stronger Euro is helping to boost June Crude Oil overnight. Technically, Wednesday’s daily closing price reversal bottom was confirmed. This could fuel the start of a 2 to 3 day rally. The minimum upside objective of 83.46 to 83.97 has already been exceeded, setting up a further rally to 84.44 to 85.18.
The U.S. Dollar is getting hammered overnight as trader appetite for risk drives up higher yielding currencies. The combination of a possible deal between Greece and the EU along with low U.S. interest rates is the catalyst behind the current rally. 
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