$SPX MAKES ANOTHER NEW CLOSING HIGH -- $COMPQ TESTS AT NEW HIGHS EARLY IN TRADE -- $COMPQ APPROACHES THE HIGHEST MONTHLY CLOSE OF THE YEAR 2000 -- $INDU TRADES SIDEWAYS THROUGH EARNINGS -- WILSHIRE 5000 ($WLSH) SHOWS BROAD SUPPORT

$SPX MAKES ANOTHER NEW CLOSING HIGH ... With the S&P 500 ($SPX) hitting new highs (1991) again today, the index is only 27 points from the 2014 level in the year 2014. That is a little more than 1% from today's high. On Chart 1 we can see the $SPX has traded in a 2.1% or 40 point range through earnings season so far. The horizontal support from the May lows now connects with the 3 year channel trend line at 1850. Looking to the far left; we can see the market had a few oscillations before finally breaking through 1900. It would appear we are having the same price action as we approach 2000.

(click to view a live version of this chart)
Chart 1

We have now created a 3-year channel on Chart 2 of the S&P500 ($SPX) that encompasses the vast majority of the price action since the 2011 lows. Some technicians may show it as a narrowing wedge but the widest part was way back in 2012 and all of the previous wedge shapes have failed to respond. At this point, the channel trend is intact and we appear to be riding the upper trend line higher.

(click to view a live version of this chart)
Chart 2

$COMPQ TESTS AT NEW HIGHS ON THE OPEN... The Nasdaq Composite ($COMPQ) accelerated out of the gate this morning to test the highs of July 3, 2014. With stellar earnings from Facebook (FB) overnight and strong reports from Apple (AAPL), Google(GOOGL) and Intel (INTC) over the last week, the Nasdaq shown in Chart 3 has pushed back up to the previous highs of early July. Today, the $COMPQ ended up closing slightly lower than yesterday which is a bit of a surprise with the strong push from Facebook.

(click to view a live version of this chart)
Chart 3

$COMPQ APPROACHES THE HIGHEST MONTHLY CLOSE OF THE YEAR 2000 ... At the current level, the Nasdaq Composite ($COMPQ)is still at the 3rd highest monthly close since the ".com" top in March 2000 as shown in Chart 4. The Nasdaq is up 130 points from last weeks low and only has 211 points to take out the all time monthly closing high through the next week if it is to happen in July.

(click to view a live version of this chart)
Chart 4

This month end closing high is easier to see on the zoomed in chart of the $COMPQ year 2000 Top shown on Chart 5. With lots of earnings still rolling in and a Federal Reserve meeting before the month end, we have a shot at making the new 'Monthly' closing high on the Nasdaq in July.

(click to view a live version of this chart)
Chart 5

$INDU TRADES SIDEWAYS THROUGH EARNINGS... The Dow Jones Industrial Average ($INDU) has traded in a narrow 200-point range with the July 3, 2014 high marking the centre of the trading range. Some charts like Caterpillar (CAT) Chart 7 and Boeing (BA) Chart 8 have had some pressure on the price after announcing earnings. So as the S&P 500 ($SPX) and the Nasdaq Composite ($COMPQ) are making new highs, the select group of stocks making up the Dow Jones Industrial Average are not having the same push higher. This is still a minute divergence at this point.

(click to view a live version of this chart)
Chart 6

(click to view a live version of this chart)
Chart 7

(click to view a live version of this chart)
Chart 8

WILSHIRE 5000 ($WLSH) SHOWS BROAD SUPPORT... From the narrowest select index to the broadest select index, the Wilshire 5000 ($WLSH) is a broad look at 5000 stocks. It is trading in a 2.2% range through earnings and also tried to take out the July 3, 2014 high today. This would suggest that there is still broad trend support even though some of the internals have weakened.

(click to view a live version of this chart)
Chart 9

THE HOMEBUILDERS ETF (XHB) AND CONSTRUCTION ETF (ITB) CONTINUE TO GO SIDEWAYS... The Home Builders ETF (XHB) is the ETF that tracks the home builders shown in chart 10. This Home Builder ETF differs slightly from the Home Construction ETF (ITB) as the ITB carries companies that supply the Home Builders as well. ITB is shown in Chart 11. Both of the ETFs for home construction have been trading in sideways ranges for over a year. Looking at the SCTR ranking, both of them trade in the bottom 3 % of ETFs based on performance. While the charts have gone sideways for a year, they have not started any sort of decline. They are near the low end of the range.

(click to view a live version of this chart)
Chart 10

(click to view a live version of this chart)
Chart 11

GOLD BREAKS DOWN THROUGH UP TREND LINE... Gold ($GOLD) made a big push down today after breaking the 6 week trend line. It sits $13 above major horizontal support. One of the interesting traits about Gold is how closely the correlation is to the Swiss Franc recently as shown in Chart 12 on the lower panel. Since February, $GOLD has had a very high correlation. With the European currencies selling off recently, $GOLD might be pulled down along with the currencies. The red horizontal support area is very important. $GOLD is currently sitting near the centre of the trading range for 2014.

(click to view a live version of this chart)
Chart 12

DUNKIN DONUTS (DNKN) GETS DUNKED ... Dunkin'Donuts (DNKN) fell below the trend line on the major topping structure today. With the price action continuing to slide off the highs, it would appear that the stock may need time to reset after a 60% run in 2013. Chart 13 shows Dunkin' Donuts clearly below the trend line. One interesting development is the stock traded up all day after gapping lower.

(click to view a live version of this chart)
Chart 13

FACEBOOK (FB) BECOMES ONE OF THE STRONGEST COMPANIES BY PRICE ACTION... Facebook (FB) continues to press higher on Chart 14 as more investors become enamored with the company. Recent purchases of other popular websites are also helping investors recognize that Facebook is wider than just one site and continues to build its online breadth. The stock made new highs on its earnings release after Wednesdays's close. The SCTR ranking for Facebook shows a reading of 98.2. That can be interpreted as the price action is in the top 2% of the large cap group.

(click to view a live version of this chart)
Chart 14

Investors will be watching positions closely as we move towards a Federal Reserve meeting for month end. We will also get our first look at Second Quarter GDP. As earnings roll in, there is a lot of data pulling the market as we move through the late July period.
Good trading,
Greg Schnell, CMT