We made new highs for this rally on the SPX, but not the Dow. The Nasdaq Composite broke over its April highs. There is some divergence between the indices now. The Dow is still about 43 points away from breaking its April intra-day highs, while the SPX is about 22 points away. So the SPX is a lot further away.
I still believe the SPX could test 1203 and fill the gap from early May. However, the Dow would have to remain weak or else it could break the April high.
The SPX did manage to break and close above 1196, so the next pivot is 1203. Breaking below 1183 and 1177 will be bearish.
The Fed announcement to purchase over $600 billion in US Treasury funds should have an impact in all financial markets. The initial reaction was volatile, but I still think that the trend over the next week or so could set the trend from the rest of the year.
Here is the chart of the 10 Year Treasury Note:
It seems to be following this channel almost perfectly, there are a lot of people calling for a bond bubble.
On the other hand, here are the 10 year treasury yields, the interest rate on the 10 year note.
Surprisingly enough, both the yields and notes closed positive today. Which almost never happens. The two are an inverse of each other, as bond prices rise, their interest rate drops and same goes for when bond prices fall, their interest rate rises. The Fed wants to keep these rates low.
Watch for those pivots tomorrow!
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