Option Investor
Market Updates

S&P 500 trades 3-month high

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The S&P 500 Index (SPX.X) 909.91 +2% has set a 3-month high as a broad rally builds toward the close as financials lead sector gains with the S&P Insurance Index (IUX.X) 261 +3.75%, Securities Broker/Dealer Index (XBD.X) 433.83 +3.43%, KBW Banks Index (BIX.X) 790 +2.6% and S&P Banks Index (BIX.X) 288 +2.41% leading sector gains.

With a 21% weighting in the S&P 500, today's gains from the financials lends to "market theory" of a truly bullish market for those that believe financials lead an advance.

Treasuries finished their session relatively unchanged. After buying at the open, sellers began stepping in as the session progressed and bullishness built for equities.

The Dow Industrials (INDU) 8,480 +1.81% has built a 150-point gain at its session high. As if not to be outdone by the S&P 500 triggering a "bullish triangle" pattern at the 900.00 level this morning, the Dow Industrials triggered a "bullish triangle" pattern at the 8,450 level. These unison breaks higher bode well for bulls and should see some further urge from bears to cover bearish positions near-term.

Sector action is broadly green with the North American Telecom Index (XTC.X) 412 -1.2% the only sector posting a 1% decline, while the Gold/Silver Index (XAU.X) 68.60 -0.36% shows fractional losses after a brief peek above its 200-day SMA of 69.13 earlier this morning with a session high of 69.62. Sector bellwether Newmont Mining (NYSE:NEM) $27.72 +0.61% adds to yesterday's gains after breaking above its 200-day SMA of $26.55 on Wednesday of last week. I view this action in Newmont (NEM) as bullish as the sector bellwethers often lead the advance.

All of the index and sectors we follow each night in our pivot analysis matrix have traded their WEEKLY R1s today, except for the 10-year YIELD ($TNX.X) 3.983, which traded its WEEKLY R1 yesterday morning. Today's action now has a bull's eyes set perhaps on the WEEKLY R2s, and the S&P 500 Index (SPX.X) is just 3.5-points off its WEEKLY R2 of 914.70.

Market breadth continues to build bullish with NYSE breadth now showing gainers outnumbering advancers by nearly 3 to 1. NASDAQ breadth shows advancers outnumbering decliners by a 2 to 1 margin. New highs on the NYSE have now built to 185 compared to 159 at the 01:00 PM EST mark, while NASDAQ new highs reaches 127 compared to the 113 level found at 01:00 PM EST.

Jeff Bailey

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