S&P hits all-time high
Stocks in the US received a boost on Thursday on the heels of a statement by Fed Chairman Ben Bernanke following the Fed meeting minutes after the bell on Wednesday. The Fed Chairman was more dovish than many expected, which led to a rally in bonds and a rally in stocks.
The meeting minutes were interesting to the extent that many had already baked in the potential for the Fed to taper their bond purchase program in September. This now needs to be removed from the market as many now perceive the Fed waiting until the end of the year to remove monetary policy accommodation.
Bernanke indicated that monetary policy would remain highly accommodative for the foreseeable future. He stated that employment was not as strong as current reports show. Bernanke said that the Fed was also looking at inflation and would defend both employment and inflation in its policy actions.
In economic data, Jobless claim surprised to the upside moving higher by 16,000 to 360,000 compared to expectation of a slight increase of 2K. The 4-week moving average of jobless claims increased by 6K in the latest week. Import prices in the US decline by 0.2%, while export prices declined by .1%. This comes as oil prices declined in June, but have retraced those losses to generate new highs in July.
The S&P 500 index closed at a new all-time high, slicing through resistance levels near 1655 on its way to the intra-day all-time high near 1,685. Support on the S&P 500 index is seen near former resistance at 1,655. Momentum continues to gain steam with the MACD printing at its highest levels in the past year. The RSI is edging higher printing at 65 which is on the high end of the neutral range but below the 70 overbought trigger level.
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