S&P sees a week of gains as bulls cement control

US data has started to look a little better over the past week, at least from the activity side, with better than expected May durable goods orders (0.4% over mkt estimates @ 1.9%), a strong Jun Chicago PMI (61.1 vs. 54.0 median) and Milwaukee NAPM (59.3, mkt 59.0) while June ISM manufacturing also showed a solid pick-up (55.3 vs. 52.0 consensus).  Confidence survey’s appear a little more fragile but we’d expect these will follow suit over the summer.

The stock market reaction to Friday’s ISM numbers suggests the market also buys into this ethos at the moment with the S&P, already through the 1,315 area which was our first objective, jumping towards 1,325.  Bulls should be able to hold the market above 1,301 now and only sub 1,293 would shorts begin to look viable again.  The aim is to drive the market towards 1,347.5 where the June reversal began and from here, after some consolidation, mount a push through 1,400.  We’d note that even after the recent bounce the market is not overbought. Buying weakness should be the specs game.