THE EURO ($XEU) SLINGSHOTS HIGHER ON ECB ANNOUNCEMENTS -- EUROPEAN MARKETS ($CAC,$DAX) WELCOME THE ANNOUNCEMENTS -- THE 10 YEAR NOTE YIELD ($TNX) STALLS AT RESISTANCE -- THE $SPX ROARS TO NEW HIGHS ON THE ECB MOVE
THE EURO SLINGSHOTS HIGHER ON MAJOR ECB ANNOUNCEMENTS... The Euro ($XEU) traded in a wide range this morning after the ECB announced strategy changes on monetary policy. While the majority of changes had been leaked to the market in advance, the Euro still reacted with a big 1.7 cent intraday range as shown on Chart 1. The $USD had a corresponding move but the reaction was not as big as the Euro. Using the UUP to get the intraday dollar movement data, the UUP traded in a wide range encompassing the last weeks price range. While we don't usually cover the European markets in the market message, today's announcement was the biggest announcement in almost 2 years from the ECB so we will review some of the broader responses to the news.

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Chart 1
EUROPEAN MARKETS ($CAC,$DAX) WELCOME THE ANNOUNCEMENTS... By early next week we should see a clearer picture of how the European indexes react to the news. The initial reaction was positive. The French market ($CAC) shown in Chart 2 closed up 1% to 4548 which is a new 5 year high, while the German Market ($DAX) on Chart 3 touched made all time highs over 10000 and then retraced to close at 9947. The London market ($FTSE) in Chart 4 traded slightly down by 5 to close at 6813. The updated charts will be available by clicking through usually one hour after the US Markets close later today.

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Chart 2

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Chart 3

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Chart 4
THE 10 YEAR NOTE YIELD ($TNX) STALLS AT RESISTANCE ... The bond market 10 Year Note Yields ($TNX) moved higher in the morning. The yield then traded down below both Tuesday and Wednesday closes at 25.75. Today's 3% intraday range on Chart 5 was the widest in 3 weeks. For both bonds and the equity markets to rally on the same news is uncommon.

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Chart 5
Bond yields have been particularly volatile since moving up aggressively off support in the last week. The bond market is at an important level as shown on the 10-year view in Chart 6.

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Chart 6
THE US EQUITY MARKETS ROAR TO NEW HIGHS ON THE ECB MOVE... The S&P 500 ($SPX) rose above 1940 on Chart 7 to make the 7th intraday high in 8 days. After oscillating around the 1875 level from March 4th to May 21st, we have broken and held above the previous closing range for two weeks. Today was one of the biggest ranges in the move up from early April.

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Chart 7
GENERAL MOTORS (GM) TRADES FLAT ON RESULTS OF INTERNAL IGNITION SWITCH PROBE... General Motors (GM) opened slightly higher than yesterday on Chart 8 and fell back inside yesterdays range. We can see GM is now up against a major support / resistance line on the chart. This week's thrust has moved it back above the 200 DMA and the MACD is now in positive territory.
Arthur did a thorough review of the Auto Sector on Tuesday Arthur's Auto Sector Review and John presented how Ford and GM are key to the Consumer Cyclical sector in his message on Wednesday. John's Market Message

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Chart 8
CONSUMER CYCLICALS (XLY) PERK UP... The Consumer Cyclicals SPDR (XLY) shown in Chart 9 spent most of April and May in the bottom third of the ETF SCTR performance. This week it has started to rise above the previous levels and the price action is also moving above some significant resistance levels. Today, the Cyclicals ETF moved above the previous resistance in April and is continuing to push higher. It is now near the level of the highs on December 31 at $66.64. This appears to be moving up quickly and it has started to improve relative to some of the other sectors as well. As discussed, the Autos are a key component of this push.

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Chart 9
AMAZON (AMZN) AND BEST BUY (BBY) START TO MOVE... Two other highly visible stocks in the Cyclicals sector are also moving. Amazon.com (AMZN) has broken out above the downward trend line as pictured in Chart 10. Amazon made one month highs and the largest intraday move this year. After finding support down near the lows of September 2013, AMZN has started to push higher. Investors looking to buy Amazon at 20% off still have time.

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Chart 10
Another interesting stock breaking out on Chart 11 is Best Buy (BBY). Best Buy had a huge year last year and then collapsed on the Christmas earnings news. After making a broad base between $24 and $28, Best Buy is breaking out. Amazingly, BBY crashed to exactly 50% off of its highs. Today it is back in the bullish break out camp, trying to break above the 200 DMA.

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Chart 11
To conclude, there appears to be a renewed interest in the Consumer Cyclicals sector. While it is not the top-performing sector yet, it is starting to move. The widely expected news out of Europe was received positively today.
For all of the men and women currently enrolled and to all of our retired or fallen Allied Forces worldwide, a big thank you for all you do as we think of our freedom on the 60th Anniversary of D-Day tomorrow.
Good Trading,
Greg Schnell CMT