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SPX Breaks Resistance; Fed Chief Yellen Visits Congress

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July 15, 2015

Yesterday’s rally gave us the first consecutive four-day winning streak for the S&P 500 (SPX) since January. The index pierced through resistance at the 2100 level. Will it become support for future sessions? The next resistance level is 2122.

That winning streak after more than six months has got to feel good, but futures are relatively flat in pre-market trading today. News announced this morning on the Producer Price Index (PPI) showed an increase in prices on a decrease in food and fuel supply. Could it be that a bit of inflation is sneaking in?

The other major news before today’s open was earnings from Bank of America (BAC). The lender beat expectations and was immediately rewarded with a 3% increase in its stock price. Still, a disturbing trend continues (as discussed in previous posts): BAC missed revenue targets. We’ve seen the financials continue to struggle on this important metric, and it bears watching going forward.

Tight Fists. A positive trend that we’ve seen from the banks is that consumers are repaying their loans at a very healthy clip. Although we continue to see disappointing retail sales numbers, it’s nice to see consumers keeping their debt in check.

Open Season. On the earnings front, today brings reports from Intel (INTC), Las Vegas Sands (LVS), and Netflix (NFLX). The streaming entertainment company’s earnings will become even more interesting on the back of today’s 7:1 stock split. This stock has seen volumes grow over the last few weeks, and there is plenty of Street anticipation on both the stock split and earnings news.

Chair at the Capitol. Finally, this week Ms. Janet Yellen will be on Capitol Hill for the next two days to address Congress. All eyes on Wall Street will be pointed toward D.C. as the Federal Reserve chief makes her remarks on the economy; her Q&A session is of particular interest. As always, ears will be primed for any hint as to when the Fed will introduce a long-anticipated hike in interest rates.

Good trading,


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JJ Kinahan

JJ began his career in 1985 as a Chicago Board Options Exchange...

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