Bulls Keep Their Foot On Gas Pedal

The market is higher again this morning with the Dow rallying another 100 points in the first hour of trading.  Of course, it's still very early in the session so we will have to see how the market closes.  I have always said the closing hour is much more important than the opening hour.

Bernanke's press conference is tomorrow so traders will have to wait another day to see if he gives any further insight about when the Fed might taper their asset purchases.  My guess is with growth slowing and inflation still low September might be too early to look for it.

The CPI data out today showed a 0.1% uptick with core prices up 0.2%, as expected.  Separately, housing starts rose 6.8% to a rate of 914,000.  But housing starts have trailed the last few recessions and the level of housing relative to population growth remains low, which should continue to act as a tailwind for the housing and construction sector.

Most Asian markets were mixed overnight.  Chinese home prices rose 6.0% last month.  And Hong Kong's unemployment rate ticked down one notch to 3.4%.

Europe's markets are also mixed today.  Eurozone economic sentiment rose to 30.6 from 27.6 last month.  Standard & Poor's pushed back its expectations for a European recovery to 2014.  It had previously forecast a rebound in the second half of 2013.

The dollar index is higher today and the yen is lower.  Commodities are mostly lower also.  Oil prices are up a bit to $98.15, but gold prices are lower near $1365.  Silver and copper prices are lower as well. 

The 10-year yield is rising again, back to the 2.20% level.  Last week the 10-yr touched 2.26% but never closed above 2.23%.  So we are watching those levels for any potential breakout. 

The VIX is a little lower to 16.60 but still above that 15 level we continue to monitor.

Trading comment: The market continues to show constructive price action.  The S&P 500 looks to have put in a short-term double bottom pattern recently at its 50-day average support.  To complete this pattern the SPX needs to trade above the 1648 level.  It is currently at 1647 so this seems likely to happen.  Tomorrow's FOMC meeting could cause a hiccup in trading, in either direction, but from there we are likely to get back on track with our quarter end strength thesis.