While the S&P 500 upswing might seem not to be overly dramatic so far, it's the internal health of it and the accompanying credit market performance that is catching our eye.

Let's start with the S&P 500 sectors - technology (XLK ETF) is holding much of today's gained ground, healthcare (XLV ETF) is doing even better and the financials (XLF ETF) appear to be forming a base. Even hard-hit energy (XLE ETF) is going higher while materials (XLB ETF) appear ready to move up some more. This would be confirmed by the consumer discretionaries to staples ratio's peek higher as it's also utilities (XLU ETF) that are struggling at the moment. These are favorable conditions for the financials to utilities ratio to move up down the road as well.

In conclusion, the above factors would point to a budding transition to the risk-on sectors in the S&P 500 rally.

As for credit markets, high yield corporate bonds (HYG ETF) appear to be readying for an upside move while municipals (HYD ETF) are stalling and investment grade corporate bonds (LQD ETF) are moving gently higher. In contrast, longer-dated Treasuries (IEI ETF) are struggling to recover ground lost yesterday as short-term Treasuries (SHY ETF) are looking to extend their decline.

In conclusion, these point to improving financial conditions and supports increased risk appetite - all in the absence of additional Fed support, which has been actually gradually tapered over the preceding weeks. To see the markets move higher in such circumstances, is encouraging, especially since there's no stock selloff as the almost $500bn aid package has become a virtual certainty.

That's a bullish constellation at least for the short-term, making it justified to close the currently still open short position at market (that's 2806 in the futures currently).

Should the outlook deteriorate again, we'll reconsider opening the short position again. There are no changes regarding the long position that we've opened earlier today.

In our Monday's flagship Stock Trading Alert, we'll extensively cover the S&P 500 performance so far. In the tomorrow's Stock Trading Alert, we'll concentrate on managing the currently open position and letting you know about the key developments since today's closing bell.

Please see the below Trading Position section that describes the only currently open position.

Trading position (short-term; our opinion): long positions (100% position size) with stop-loss at 2700 and the initial upside target at 2900. Stay tuned as finetuning the open trade positions' parameters over the coming days is likely.

Thank you.

Monica Kingsley
Stock Trading Strategist
Sunshine Profits - Effective Investments through Diligence and Care