SHORT TERM: December starts off on a positive note, DOW +127
Overnight all the Asian markets were higher. Japan called for an emergency economic policy meeting, and Australia raised their base rate 0.25% to 3.75%. Europe opened higher and closed +2.50%. US index futures were higher overnight, and at the open the market gapped higher to SPX 1103. During the opening minutes the SPX rallied to 1109 before pulling back to 1104. At 10:00 ISM manufacturing was reported lower: +53.6% v 55.7%, Construction spending improved: 0.0% v -1.6%, and Pending home sales posted its ninth monthly gain: +3.7% v +6.0%. The market resumed its rally shortly thereafter and hit SPX 1112 by 1:30. The market then drifted lower for the rest of the day, hitting 1107 at 3:30, and closing at 1109. For the day the SPX/DOW were +1.20%, and the NDX/NAZ were +1.30%. Bonds lost 12 ticks, Crude added 85 cents, Gold rallied $19.00, and the USD was lower. Support for the SPX ratchets up to 1107 and then 1090, with resistance at 1133 and then 1168. Short term momentum was rising late yesterday and reached overbought today. Tomorrow, the ADP index at 8:15 and then the Beige book at 2:00.
This two day short term rally has carried the DOW to 10,501 and the SPX near the previous high at 1114. This sideways choppy action in the SPX continues to appear similar to the choppy sideways action at the last medium term top in June. As a result we have modified the short term hourly count to display a potential fifth wave, short term rally ending, currently underway. Several US sectors continue to be in confirmed downtrends: KBE, KRE, R2K, SOX, XLE, and XLF. Also, negative divergences continue on nearly all timeframes and the OEW 1107 pivot remains formidable. Again a breakout above this pivot would suggest higher prices, and a break down below the 1090 pivot, lower prices. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bear market rally