Stock Market -- Short Term

The June rally is extending into July with the SPX continuing in a confirmed short term uptrend. The
market is moderately overbought at a 3.6% premium to the the 25 day m/a, so no one should be
surprised if a little money comes off the table on Thurs., especially ahead of the employment report.
$SPX chart Note the positive cross for the extended time MACD in the first bottom panel of the
chart, but note as well that when the lines approach zero from below there can sometimes be a
stumble. If you scroll down to the 7/1 post for Sun. and click on "$NYAD" (in red), you will see
that breadth is breaking out to a new all-time high which frequently, but not always, portends a
new cycle high for the SPX.

The very bottom panel for the SPX chart shows that the broad, global stock market excluding the
US (GWL) is moving toward reversing an extended downtrend in relative strength as players are
starting to take on more risk as sentiment regarding the global economy improves and the US
dollar comes under some downward pressure.

The risk in the US stock market is elevating in my book as liquidity in the financial system is
growing far too slowly to suit me. Economic recovery momentum potential slowed significantly
in June. This would normally result in a weaker market, but there may be money in size betting
that "bad news is good news" in that further deceleration of the pace of the recovery may
result in a spanking new QE program from the Fed. That kind of guesswork is not my game
even though I would be happy to see the Fed step up and add more liquidity to the system.