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Two Ways: S&P Rally Hits the Brakes


Strengthen your portfolio in good times and bad.

Debt Ceiling?

We've had one of the biggest rallies since the Great Depression, an uptick in housing, manufacturing, and some economists are even saying farewell to the great recession of 2008-2009. But according to The Wall Street Journal, that rally may be done for the time, being capped off by the consumer debt burden.

Data from the Federal Reserve shows household debt levels at 124% of disposable income, a little off from the 132% peak in 2007. The savings rate fell slightly in June to 4.6%, but many economists expect it to return to the 7-10% range. And with consumer spending accounting for over two-thirds of the economy, there isn't much of a catalyst for a recovery to be anything other than "slow" and "tenuous."

See Professor Satyajit Das' 3-part series, Economic Stabilization Does not Indicate Recovery.

From the Bull Pen: Bulls looking for longside exposure can keep an eye on Pepsi (PEP). In the short term gapfill at 57 should offer support as well as the 20 day moving average (56.77). Entry can be set near those levels with a 2% sell stop below.

From the Bear Cave: The big move in the dollar index (DXY) on Friday possibly suggests that the recent rally has run out of steam. For a short term trade, consider Bank of America (BAC). Watch for more downside follow-through. Remember to set your buy stops and be careful of Wednesday's FOMC results.

Quick Check Around the World

Asian trading closed with the Hang Seng 2.72%, India -0.99%, Shanghai -0.34%, Nikkei 1.08%, and Taiwan 0.21.

Across the pond, we see the FTSE -0.56%, CAC -0.55%, DAX -0.78%

As of 8:15 AM EST, S&P Futures are trading -1.75 to 1004.75 and Nasdaq futures are -4.00 to 1615.75.

A Look at Commodities

Over in commodities, crude oil is trading -0.33 to 70.60 while gold is -3.500 at 954.60 this morning. Silver is -0.198 to 14.47 and copper +4.100 to 282.65.

The dollar index is -0.1550 to 78.9500.

On the Radar

No economic events on the radar today, but click here for the list of this week's events.

Remember, Minyans! Always trade with a plan and an exit strategy. Good luck and have a great week!
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No positions in stocks mentioned.

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