Developing S&P rally looks like it has legs

S&P500 has managed to string together a couple of good days and more importantly Tuesday's finish pushes the market through recent intra-day tops to leave us at the highest closing level since June 3rd (based on ES1). Equally interesting is how solid support now looks with that 200-DMA (@ 1,263) proving a very good floor which leaves us with attractive risk reward levels. Working from a long base and looking to add on any short-term dip mid range leaning on this marker on a closing basis (or perhaps an intra-day stop @ 1,257 if you're wanting to reverse if this zone breaks) looks sensible. 1,315 is the first target area on the topside and if this area can be cracked 1,350 would be the draw.


Given how US macro data has been printing you have to think a lot of bad news is now priced and assuming the Greeks can push their next (not last) fiscal plan through to keep bailout funds flowing another 'risk on' phase looks probable. Such an environment should really have the potential to attack the Bid Laden bounce highs (1,375ish) and potentially lift the market towards the 1,400/1,430 area over the rest of the summer. Given how things have been moving this probably rules out any extension of the dollar bounce from the early June low and favours plying EUR/USD from a long base again (entering sub 1.43).


We still like the Bund chart mid-term but it could also set back the bull move here where there is still a half point of P&L despite the 1pt pullback of the last two days on the table.