Stocks ended nominally higher after Wednesday’s drubbing closing on the pivotal and technically important 200 day moving average line of the S & P 500. As noted many times, the markets are overly influenced by technology based trading; trading that places great emphasis upon this moving average line. Equites were considerably higher throughout the day but ended lower on late afternoon selling.
As noted several times, the averages, albeit not the typical stock, is weathering the negative headlines extremely well, perhaps the result of the significance of the 200 day moving average line and the immense liquidity added to the financial system via global central banks.
Greece is still in the headlines with all expecting a resolution on Sunday. The narrative around China is increasing to perhaps to a crescendo. And then there is Iran. At this juncture an agreement will not be reached by today’s deadline. Negotiators are confident that a compromise will be made but not by the self-imposed deadline.
And what about Puerto Rico. Currently the issues facing this island Commonwealth is more of a sideshow. I don’t think this debt crisis will rise in market significance but I think it is a great example of what can possibly happen to greatly indebted states who have promised unaffordable benefits and entitlements to their residents/workers.
What will happen today? FRB Chair Yellen speaks today. Will she offer any further insight to the Fed’s thinking?
Equities should open sharply higher as Greece submitted proposals to its creditors which according to newswire reports is similar to proposals that the EU had suggested in prior weeks. Moreover China again rallied but I must write about 50% of its stocks are still not trading.
Will the rally hold or will it reverse course as was the case in yesterday’s trading?
Last night the foreign markets were up. London was up 1.25%,Paris up 3.03% and Frankfurt up 2.18%. Japan was down 0.38% and Hang Sang up 2.08%.
The 10-year is off 12/32 to yield 2.36%.