1. This has been a Teflon market since late June, unwilling to quit and squeeze shorts mercilessly. I have no idea how much of this is program driven. Suffice to say, this market seems able to trend higher and lower than what many investors were used to.
2. S&P 500 needs to take a breather now that it’s in overbought territory. I expect the earning season to be a good one. Though investors should not be too quick to embrace any conclusion of the debt ceiling talk as a positive event. Since the deal will likely be fiscally contractionary, instead of expansionary.
All in all, the S&P 500 may continue to trade sideways this summer.
3. On the other hand, the HK market appears more vulnerable. The large cap Hang Seng Index had a lackluster bounce. And many mid caps failed to capture important trend lines. There is a fair chance the HSI will retest the June lows in the coming months.