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An initial upward track feels more technical than fundamental in S&P

Posted 08/22/2017 10:36AM CT | Jeff Yasak

Global equity markets were higher overnight with the Dow Jones industrial average expected to open 35 points higher.  In addition to a generally positive economic environment, the stock market this morning should benefit from news that Chinese automaker Great Wall Motor Company LTD was considering taking an interest in Fiat Chrysler.  Another element helping cyclical attitudes in the market came from home builder, Toll Brothers, as their profit rose by nearly 41% off what the company described as an improving job market.  Limiting the market on the upside is news that the US administration was planning to commit more troops to the effort in Afghanistan.  Unfortunately for the bull camp, evidence of efforts by the US treasury Secretary and members of congress to move forward on tax reform have not been given much mainstream media attention or on might have expected the risk on argument to gain even more strength.  As indicated already, the path of least resistance in the September E mini S&P is pointing upward with a series of closes around 2427 representing close in support.  However, the strength in prices from yesterday’s lows were not laid at the feet of some specific event and therefore one might assume the gains this morning are merely technical balancing from four days of aggressive selling pressure.

Sep ’17 Emini S&P Daily Chart

Sep '17 Emini S&P Daily Chart

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Jeff Yasak

Senior Market Strategist
Jeff studied finance at the University of Wisconsin-Madison and at Loyola University. He left the corporate world in 1995 to pursue his dream of working in the financial markets. Jeff's trading career began as a clerk in the S&P 500 pit at the Chicago Mercantile Exchange. This is where he developed a great interest in the options market that led him to the retail futures business. Jeff spent a few years as a broker's assistant before managing clients of his own.
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