The market rallied over 2.5% Friday on the news of European leaders agreeing to relax
conditions on emergency loans for Spanish banks and possible
help for Italy - to stem the region’s debt crisis. Economists are now expecting the ECB will lower its
benchmark interest rate by at least 25 basis points to a record
low of 0.75 percent on July 5.
The weekly chart above gives us the best perspective on trade location. We are bracketed within a large balance area within no confirmed excess at the highs. We closed the Quarter with an Outside Week. The market tested the low of this balance at 1255.50 and got rejected - the destination trade now becomes the opposite end of this balance which are the March 2012 highs. Our immediate upside weekly reference is 1363.75. The 1365 area is resistance as that was the last high before the market broke to the upside in March. Lets look at the Profiles next -
Friday's profile looks pretty stretched with several anomalies and a POC that did not rise with Price i.e. the market may have gotten too long. The large 18.50 handle gap is to be treated as Excess and will probably take a couple of attempts before it is filled. Our immediate reference for Monday is the late day Spike. Do we Open in or out of balance relative to the Spike? The base of the of Spike - 1353.25 is short term support.
Global Purchasing Managers' Manufacturing Index (PMI) day begins tonight. PMI day is the day (always at the beginning of the month) when PMI
manufacturing reports come out for all the world's big economies, from
China to Europe to Brazil. Last month's PMI day confirmed that basically the entire world is slowing. This next round of data will be critical to indicate whether things have deteriorated or stabilized.
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