The market continued it strong rally from Monday's lows, with the VIX yet again leading the way. Perhaps more importantly the financials are picking up some momentum. Yesterdays stress test and subsequent share buyback announcements should continue to put a bid under financials, which in turn should help keep the overall market moving higher.
S&P500 futures are at trendline support from Monday's move. After yesterdays close there were two odd $SPY paints. One at $207.67 a full $1 above the close, and another at $208.49.
The $207.67 price was hit just 30 minutes later, the $208.49 price has yet to get hit. We've seen these curious paints in the past with the $SPY in December of 2014, and the VIX on numerous occasions but most frequently just after a FED meeting.
In almost every case the price gets hit down the road, meaning $208.40 for the $SPY is coming, it's just a matter of when.
The $SPY fat finger was filled in the middle of 2015:
The VIX continues to lead the way. As I pointed out on Monday with the VIX down near 10% despite a nasty sell-off, there was a good chance we had seen at least a short term bottom for the market.
and did we ever rally.... The VIX fell off a cliff and the market has reversed in a dramatic fashion.
What do we need to see this relief rally continue? The financials.
Since the February lows Financials have been lagging the S&P500. In that respect that have a lot of ground to cover to the upside. Yesterdays stress test and buyback announcements could help spark some catching up for the financials.
Small caps are seeing a reversal in momentum. After running out of gas at $120 they found support at $107.50 and prices have reversed.
Positive momentum could send prices back up to that $120 area in the weeks ahead.
Tech also has turned the corner. Momentum is on the upswing, which historically means at least a short term continuation of the current move.
$QQQ is looking to come back to fill Friday's gap down.
and finally the VIX. It's gave us another spike of fear, although it was a lower high than previous 2016 readings. Prices continue to melt lower and look poised to re-visit long term support.
A lower VIX will mean higher stock prices. A new record high? Just a few days ago that was crazy talk. Today? Its a plausible scenario.
Heading into July, without any additional headwinds, the market could continue to grind higher. The beaten down names will benefit the most in this environment. $GS $NFLX $WYNN $WFM $BA $CF $HD to name a few.
$SPY $208.49. Yesterdays after hours paint. How long will we have to wait until it gets hit again? Based upon the recent price action, we could see that level again before the closing bell. If the financials see a strong rally today that will help lift all boats and giving the market a strong end to the month of June... which just a few days ago looked to be heading into the abyss...