wednesday update

SHORT TERM: overnight buying fuels market rally, DOW +151

Overnight the Asian markets were mixed. Europe opened higher and closed +1.55%. US index futures were higher overnight as well. This was quite the inverse of yesterday’s activity. At 8:30 Personal income (+0.5% vs -0.1%)/spending (+0.4% vs +0.2%) were reported higher, PCE prices were reported flat (0.0% vs 0.0%), Durable goods orders were reported lower (-3.3% vs +3.5%), and weekly Jobless claims improved (407K vs 439K). The market gapped up at the open to SPX 1188 and continued to rally. The SPX had closed at 1181 yesterday. At 10:00 Consumer sentiment reported improving (71.6 vs 69.3), New home sales declined (283K vs 307K) and FHFA home prices declined (-1.6% vs +0.9%). The market continued to rally through all the economic reports. At 1:00 the FED issued this: http://www.federalreserve.gov/newsevents/press/monetary/20101124a.htm. The SPX hit 1198 around 1:30 and then started to pullback. By 2:30 the SPX hit 1195, only three points lower, and then tried to move higher again. Nearing the close the SPX hit the high for the week at 1199 and closed at 1198.

For the day the SPX/DOW were +1.45%, and the NDX/NAZ were +2.00%. Bonds lost 36 ticks, Crude rallied $2.85, Gold slipped $4.00, and the USD was higher. Support for the SPX jumps back up to 1187 and then 1176, with resistance again at 1222 and then 1240. Short term momentum moved higher off of yesterday’s slight positive divergence to overbought today. Tomorrow is the Thanksgiving holiday in the US, markets will reopen on friday.

This market has been acting like it was on a bungee cord recently. Nearly every other day there is a gap down or gap up to open trading and set the tone for the rest of the day. Nevertheless, today’s market action swung the short term OEW charts positive again. This choppy activity allows for either an ongoing Intermediate wave four triangle, or a failed flat at yesterday’s low of SPX 1177. Either way, the SPX still needs to clear 1207 to set the tone for more consistent higher prices, or drop below 1188 to continue this pullback. Best to your holiday!

MEDIUM TERM: uptrend

LONG TERM: bull market

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987