SHORT TERM: stocks rally to start the holiday weekend
Overnight the Asian markets were mixed, but Europe came in slightly higher +0.10%. Stocks opened higher on overnight buying, and an oversold momentum reading entering yesterday’s close. Thus far, the rally looks fairly broadbased, as the market tries to recover from the whipsaw activity for the past few days. Bonds are up a few ticks, Crude is 65 cents higher, Gold is up $2.00, and the Euro is higher. The SPX has managed to rally back to 1515 this morning after hitting a low yesterday of 1505. Typically, presuming we are now in a downtrend, short term momentum will rally back to neutral before turning over again. The market is currently approaching that level. Yesterday’s selling broke through the rising trend line for the entire uptrend. That’s typically a technical failure. An attempt to retest that trendline often occurs before the market turns lower again. As I noted yesterday, if Major wave 4 is underway, the minimum expected decline would be a total retracement of this recent uptrend from the mid-March lows at SPX 1364 and DOW 11,940. The DOW will probably find support at that level, but the SPX will probably not. Most likely for the SPX is a retest of the long term EW pivot at 1316. A downtrend has not been confirmed yet. However, these will most likely be the downside targets if the correction is underway. Best to your trading!
MEDIUM TERM: neutral, targets hit
LONG TERM: bullish.