SPY June 18 2013

SPY June 18 2013

An unexpected rally developed today in SPY, despite weak market internals. It wasn't a vigorous move higher, but it did take out the key resistance at 1640 and closed well above that number. The downtrend channel from the all-time high now is history. That signifies a resumption of market health and a likelihood of further drives higher, perhaps after some hesitation due to reports from the Fed meeting being held this week.

Chairman Bernanke speaks on Wednesday, with all the expected related announcements from the Fed about how the Fed isn't changing a thing about QE and so forth. We got the bounce we looking for heading into his speech, now a period of hesitation as the market worries about what he says could be in the cards. Like everyone else, we will wait until after the dust settles before drawing any further long-term conclusions about where this market is headed, but if Bernanke says the right things, we should be headed higher. This situation is ripe, however, for short-term volatility in both directions.